United States: PPI slows in October, Wall Street still anticipates a rate hike
The American PPI climbs 6.5% over one year. Bitcoin remains below $70,000 and markets anticipate a Fed rate hike in December.
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The producer price index measures the change in sales prices received by American producers. In October, prices of goods increased by 0.5%, with an increase of 1.3% for food and a slight decline for energy of 0.1%. Prices of services increased by 0.2%, for the fifth consecutive month.
Excluding food and energy, the monthly increase fell from 0.8% to 0.3%, in line with expectations. The BLS also publishes a measure that excludes commercial services margins. This increased by 0.5% over one month, as in September, and by 4.9% over one year. The slowdown in the overall index therefore masks different developments depending on the components.
The publication comes after a better-than-expected consumer price index. The PPI provides information on the upstream pressures that companies can pass on to their customers. The Fed measures its 2% target using the personal consumption expenditure price index, the PCE. Heading into the Dec. 8-9 meeting, contracts tracked by CME FedWatch favored a 25 basis point hike, with about a 15% chance of a 50 point hike.
The yield on two-year U.S. bonds fell from about 4.88% to 4.84% after the release, according to the Wall Street Journal. Lower yields can support risky assets by reducing the relative attractiveness of bond investments. Bitcoin had, however, fallen below $70,000 before the report and was still trading around $69,500 shortly after.
The monthly figure therefore offered some respite for US bonds. For bitcoin, this respite remains limited as long as markets anticipate another rate increase in December.
An editorial article. Le Journal du Coin, the first French-speaking news media on cryptocurrency, Bitcoin, and blockchain protocols.
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- Journal du Coin13 Nov, 16:40
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