Thursday data: A double-dip downer
All 3 major stock indexes red; Nasdaq down most
Energy biggest laggard among S&P sectors; real estate leads gainers
STOXX 600 off ~0.1%
Dollar, bitcoin up; crude down >1%; gold slides >1%
U.S. 10-yr Treasury yields rise to ~4.30%
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THURSDAY DATA: A DOUBLE-DIP DOWNER
Investors were subjected to a double-dose of downbeat data on Thursday.
Inflation in November ran hotter than markets assumed, with producer prices rising at double the expected rate.
The Labor Department's producer price index (PPI) USPPFD=ECI, which tracks the prices U.S. companies get for their goods and services at the figurative factory door, jumped by 0.4%, leap-frogging over the 0.2% consensus and marking an acceleration from October's upwardly revised 0.3% gain.
Year-on-year, PPI increased by 3.0%, landing 0.4 percentage points to the north of analyst expectations.
On the other hand, core PPI - which strips away food, energy and trade services in order to iron out volatility - bucked the trend by cooling down on a monthly basis, to 0.1% from the prior month's 0.3% reading.
Core PPI posted a 3.5% year-on-year rise, a repeat from October.
With this report, along with wage growth and CPI, a picture is emerging of inflation having hit a bit of a speed bump in November on its long, arduous road down to Powell & Co's 2% target.
Even so, financial markets are pricing in a near-certain 98.1% probability that the Fed will ease its key Fed funds target rate by 25 basis points at the conclusion of next week's policy meeting, according to CME's FedWatch tool.
Beyond that, the path forward is less clear; to that end, investors will be paying close attention to the storied dot plot next Wednesday for clues regarding the central bank's rate cut trajectory.
"From the monetary policy perspective, PPI and CPI shouldn't tip the Fed's scales next week and we expect another 25bps cut," writes Oren Klachkin, financial markets economist at Nationwide. "But evidence of slower disinflation suggests a policy pause is in the cards for early 2025."
Flipping over to "side B" of the Fed's dual mandate, initial jobless claims USJOB=ECI unexpectedly jumped by 7.6%, according to the indefatigable Labor Department.
Last week, 242,000 U.S. workers joined the queue outside the unemployment office, 22,000 more than economists predicted, touching the highest level since early October.
Even so, it's worth remembering claims numbers tend to be volatile around the holidays.
"This is a sharp turn in the data that soundly interrupts the downtrend that has been developing since August," says Carl Weinberg, chief economist at High Frequency Economics, who adds that "the overall level of claims is still extremely low by historical standards. You have to go back to the 1960s to find a sustained time of similarly low claims."
Ongoing claims USJOB=ECI, reported on a one-week lag, rose by 0.8% to 1.886, suggesting that it's taking laid off workers longer to find suitable replacement gigs.
"The elevated level of continued claims is consistent with other data showing that unemployed workers are finding in more difficult to find new jobs," says Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
(Stephen Culp)
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EARLIER ON LIVE MARKETS:
DISAPPOINTING ECONOMIC DATA CURBS INVESTOR RISK APPETITE - CLICK HERE
FRANCE'S NEXT PM: "POLITICAL" OR "TECHNICAL"? - CLICK HERE
NII RISKS TILTED TO THE DOWNSIDE FOR EUROPEAN BANKS - CLICK HERE
RBC GETS CONSTRUCTIVE ON LUXURY - CLICK HERE
ZURICH POPS, LUXURY IN DEMAND - CLICK HERE
EUROPE BEFORE THE BELL: ALL QUIET AHEAD OF THE ECB - CLICK HERE
ECB, SWISS SET TO CUT, BUT BY HOW MUCH? - CLICK HERE
Inflation gauges https://reut.rs/3Ddga5q
Initial jobless claims https://reut.rs/3ZPTxwU
Continuing jobless claims https://reut.rs/4fkWKJ3
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