Somehow stocks seem to be turning this into good inflation news this morning ahead of tomorrow’s big CPI inflation report–The Standard & Poor’s 500 is up 0.19% as of 12:30 p.m. New York time and even the NASDAQ Composite is slightly ahead with a gain of 0.06%–but, frankly, I don’t see how.
The September producer price index (PPI), a measure of prices at the wholesale level, rose 0.4% in September after falling 0.2% during August. Economists had expected a 0.2% increase,
At some point prices at the wholesale level turn into prices at the consumer level
So, in other words, today’s PPI would seem to say that inflation is stubbornly high and not dropping as quickly as the Federal Reserve hopes.
And that tomorrow’s CPI inflation read for September is likely, at the best, to show that inflation is dropping at a very slow rate.
If that is indeed what tomorrow’s numbers show, that would argue that the Fed will raise interest rates by 75 basis points again at its November 2 meeting. And that the hoped-for pivot toward interest rate cuts and way from interest rate increases, remains tantalizingly distant.
