U.S. producer prices rose in November, reaching their highest level since July, mainly driven by a sharp increase in energy costs. This suggests a modest rebound in wholesale inflation pressures.
The main driver behind the PPI increase was the energy sector. At the same time as the inflation data was released, separate government data showed that retail sales in November exceeded expectations. Meanwhile, the CPI report indicated that underlying consumer inflation growth in December came in below expectations, reinforcing the view that overall price pressures are gradually cooling.
Markets generally expect that after three consecutive rate cuts, U.S. central bank officials will keep interest rates unchanged for now, as they wait for further progress on inflation and assess developments in the labor market.
Is this good news for the Canadian energy sector? For investors like me who hold both U.S. and Canadian energy stocks, does it make more sense to stay bullish here or to remain cautious and wait? I’m curious how others are thinking about this.