US Producer Price Index Rises Most in Three Months on Energy Costs

Summary

Bloomberg's Michael McKee reports that August PPI rose 0.4% month-over-month and 5.4% year-over-year, above expectations on energy costs, while initial jobless claims held at 206,000. He highlights that the PPI data understates recent oil and diesel price rises because it only captures prices through August 11. Crude oil hit triple digits on WTI and Brent, adding to Fed policy pressure. The report frames a toxic brew for bonds and raises questions about further Fed rate hikes.

• August PPI rose 0.4% m/m and 5.4% y/y, above consensus on energy.
• Core PPI ex food and energy rose 0.2% m/m and 4.6% y/y.
• Initial jobless claims came in at 206,000 versus a revised 207,000.
• August PPI data only includes prices through August 11, missing recent oil and diesel surges.
• WTI and Brent crude briefly hit triple digits for the first time since May.
• Energy price increases are spreading to diesel, jet fuel, gasoline, home heating oil, and trucking freight.
• Two-year yields moved to session highs and bonds came under pressure as Fed rate-path concerns increased.