The final product price index in June was 0.2%, according to the US Bureau of Statistical Work. Final results in May be unchanged, while they come in as high as 0.5% in April. On the other hand, the final growth rate increased by 2.6% for the 12 months ending in June, the largest progress since the 2.7% rise in the 12 months ending March 2023.
June’s rise could be attributed to a final index of up to 0.6% in final meat sales prices. On the other hand, the final demand index requires a ratio of 0.5.%.
In June, it did not get final results for food and services, coming in at 0.2% in May. The final 12-month index came in June, with the final index reaching even lower, while food and services sales were 3.1 percent.%.
Product details that occur in June in service prices include up to the final by more than a quarter and beyond, thus amounting to a 3.7% rise in machinery and vehicle wholesale sales margins, including indices and auto parts and automotive components, deposit services (partial), trade in complex lubricating components, computers and software, vending components, professional and commercial, and wholesale trade. On the other hand, the prices of transporting goods by trucks vary by 1.2%, in addition to mortgage loans (partial), spare parts, and bulk supplies.
Product details show that the increase in prices for final order services for June was more than a quarter of the overall increase, driven by a 3.7% increase in wholesale machinery margins, including automotive retail and auto parts, partial deposit services, fuel and lubricants retail, hardware and supplies, professional and commercial equipment, and wholesale trade. On the other hand, long-distance car transport prices fell by 1.2%, in addition to a decrease in residential (partial) mortgages, machinery and equipment parts, and wholesale supplies.
Limited selling pressure for the dollar and the rise in the producer price index
The dollar is under some selling pressure at the start of the US session despite stronger-than-expected PPI readings. However, the dollar’s bearish momentum is relatively limited. The sell-off following yesterday’s CPI did not gain much momentum, partly due to an unexpected decline in stock markets. For now, futures are pointing to a flat opening, and if activity in risk markets remains weak in this last session of the week, the dollar could stabilize, at least temporarily.
Meanwhile, the Japanese yen is in consolidation after yesterday’s big gains – the biggest daily rise against the dollar since late 2022. Although there is no official confirmation from Japanese officials about the intervention in the currency markets, data released by Bank Japan today suggests that the volume of intervention was likely around 3.5% of the Japanese yen.
The FTSE rose 0.19%. The DAX rose 0.22%. The CAC rose 0.65%. The yield on the 10-year bond in United Kingdom rose 0.0524 to 4.131. Germany’s 10-year yield rose 0.045 to 2.513. Earlier in Asia, the Nikkei fell 2.45%. The US producer price index rose 0.2% m/m and 2.6% y/y, the biggest year-on-year advance in more than a year
The US Producer Price Index for final demand rose 0.2% m/m in June, slightly above expectations of 0.1% m/m. The PPI rose 2.6% y/y for the 12 months ended June, above expectations of 2.2% y/y. This is also the largest annual progress since March 2023.
The Producer Price Index (PPI) for food, energy and business services was unchanged at 0.0% m/m. During the 12-month period, the PPI excluding food, energy and commercial services increased by 3.1% year-on-year.
Effects of the Producer Price Index (PPI) on the stock market
Month-to-month changes in the Producer Price Index (PPI) can have different effects on the stock market. Here’s how changes in the monthly PPI typically affect the stock market:
Sector-specific impacts: Producer Price Index (PPI) data (PPI) can affect different sectors of the stock market differently. Sectors that are more sensitive to changes in producer prices, such as materials, energy and manufacturing, may have more direct effects. Higher producer prices can increase input costs for companies in these sectors, which can put pressure on profit margins and negatively affect stock prices. Conversely, sectors less affected by changes in input costs, such as technology or services, may be relatively less affected by monthly PPI data.
Market sentiment and investor confidence: PPI data can affect overall market sentiment and investor confidence. Higher-than-expected increases in producer prices may raise concerns about potential inflationary pressures, which could increase market volatility and caution investors.
Monetary Policy Response: PPI data on a monthly basis can influence monetary policy decisions by central banks. If the PPI shows higher-than-expected increases in producer prices, this could prompt central banks to consider tightening monetary policy by raising interest rates or reducing stimulus measures. Central bank actions and data on inflation and monetary policy can have significant effects on the stock market, as they shape investors’ expectations and influence on borrowing costs for companies.
It is important to note that the stock market’s reaction to PPI data can be influenced by various other factors, including prevailing economic conditions, earnings reports, geopolitical events, and market sentiment. Traders and investors analyze PPI data along with other relevant information to assess the potential impact on specific sectors and individual stocks and make investment decisions accordingly.
