The US Bureau of Labor Statistics offered the news wires a surprising data point yesterday, one which markets were not too thrilled to hear. The Producer Price Index (PPI) for February came in at 0.6%. Expectations were half of that figure. Although only one metric among many, it is not the first hint we have seen of higher inflation. The Fed has made it clear time and time again that it will not act until inflation is thoroughly tamed, so yesterday’s news will justifiably worry some investors that rate cuts are further down the road than previously imagined.
The DXY jumped half a percent on Thursday, to the detriment of its competitors. The move prompted an inverse reaction in gold, which lost half a percent to close the day at $2,162 an ounce. The reaction in stock markets was hardly career ending, major indices losing roughly a third of a percent, although for market participants used to new all-time highs every other session the results were comparatively disastrous.
We finally saw some movement in oil markets yesterday, for the first time in what seems like an eternity. The International Energy Agency predicted reduced production in 2024, coupled with an increase in oil demand, despite a global economic slowdown. Declining stockpiles in the US and Ukraine drones strikes on Russian refineries also contributed to the upwards pressure on oil, sending Brent Crude up to $84 and WTI to $80 a barrel, the highest prices we’ve seen since last November.
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