US PPI Final Demand for April 1.4% vs 0.5% est. YoY 6.0% vs 4.9% estimate

• Prior month MoM revised to 0.7%.and revise higher to 4.3%
• Prior month ex food and energy 0.2% MoM and 4.0% YoY
• PPI MoM 1.4% versus 0.5% estimate
• PPI YoY 6.0% versus 4.9% estimate
• PPI ex food and energy MoM 1.0% vs 0.3% estimate.Highest since March of 2022.
• PPI ex food and energy YoY 5.2% vs 4.3% estimate
• PPI ex food, energy and trade MM +0.6% vs +0.2% last month
• PPI ex food, energy and trade YoY 4.4% vs 3.7% last month
• Services inflation was up 2.5%

The two year yield has moved above the 4% level to 4.010% 1.5 basis points. The 10 year yield is up 1.7 basis points at 4.488%. Both were mostly lower at the start of the North American session.

The S&P index is trading down -1.71 points in premarket trading. It was up about 21 points at the start of the North American session. The NASDAQ index is still up around 95.7 but down from being up over 200 points earlier in the US session. The Dow is down -220 points.

The USD is higher after the report but apart from the GBPUSD and the NZDUSD (new lows for each) is within the prior range going into the report.

Five year inflation expectations is up to 2.7% from a more normal 2.2%. That is starting to tick to the upside.

The combination of the CPI and the PPI will lead to a rise in the PCE, the favored inflation guide for the Fed.

The probability of a Fed hike in April is now up to 59%. Kevin Warsh is coming into a difficult situation. There are no cuts priced in any time soon. That will not sit well with Pres. Trump who has implored and criticized Fed Chair Powell to cut and for not cutting rates. It would be difficult for Warsh to encourage a cut. The best case scenario may be for him to lobby for no hike. Pres. Trump’s best hope may be to just put the pedal to the metal (and cross his fingers) for runaway AI growth (just inflate), and continue to ignore/blame inflation on oil and hope for a tumble if and when the war ends and the Strait of Hormuz is opened.

Although Fed’s Cook and Barr are expected to speak, they are not scheduled to speak on the economy. Fed’s Goolsbee is scheduled to speak a few times today (he spoke a few times yesterday too) and expressed concerns about services inflation. He is likely to continue his concerns about inflation trends today.

UPDATE Stocks are now showing: Dow -241 points, S&P down -3.96 points. Nasdaq up 55 points. Crude oil is up $0.21 to $102.39.