PPI and Retail Sales Top Forecasts; 10-Year Yield at 5.10%
September producer prices rose 1.3% vs a 0.5% estimate and retail sales gained 0.8% vs 0.3%; the 10-year Treasury yield was 5.10% on Oct. 15.
A heavy slate of U.S. economic data on Thursday, Oct. 15, showed producer prices and retail sales running ahead of economists' estimates. The Producer Price Index rose 1.3% in September, against an estimate and prior reading of 0.5%, and was up 6.3% from a year earlier versus a 5.3% forecast. Core PPI increased 0.7% on the month, compared with a 0.3% estimate, and 5.0% year over year, compared with 4.4% expected.
Retail sales rose 0.8% in September, above the 0.3% estimate but below August's 1.3% gain. Sales excluding autos increased 0.9% against a 0.5% forecast, while sales excluding gas and autos rose 0.2%, in line with expectations. From a year earlier, retail sales were up 6.3% versus an estimate of 5.2%.
Regional factory surveys diverged. The New York Empire State Manufacturing Index rose to 25.5 from 7.6, above the 10.3 estimate, while the Philadelphia Fed Manufacturing Index fell to 20.9 from 37.8, short of the 28.4 forecast. Initial jobless claims were 199,000 against an estimate of 200,000, and continuing claims were 1.71 million, matching expectations.
FRED data showed the 10-year Treasury yield at 5.10% and the 2-year at 4.77% on Oct. 15, a 10-year/2-year spread of 33 basis points. The effective federal funds rate was 3.88%. The VIX closed at 16.46, the high-yield option-adjusted spread was 3.23%, and the broad trade-weighted dollar index stood at 121.57.
On policy, the WSJ reported that Fed Chairman Kevin Warsh declined to endorse or push back on colleagues' signals that officials are in no rush to raise interest rates this month, saying the central bank was no longer in the business of previewing its decisions. A Reuters headline described Fed's Goolsbee as calling inflation "discouraging, but still some optimism."
Data
| Release | Actual | Estimate | Previous |
|---|---|---|---|
| PPI MoM (Sep) | 1.3% | 0.5% | 0.5% |
| Core PPI YoY (Sep) | 5.0% | 4.4% | 4.8% |
| Retail Sales MoM (Sep) | 0.8% | 0.3% | 1.3% |
| Empire State Mfg (Oct) | 25.5 | 10.3 | 7.6 |
| Philly Fed Mfg (Oct) | 20.9 | 28.4 | 37.8 |
| Initial Jobless Claims | 199K | 200K | 198K |
| 10-Year Treasury | 5.10% | ||
| VIX | 16.46 |
Data: FMP, FRED. Figures are close-to-close unless stated.
In the news
- WSJ: Fed Chairman Kevin Warsh declined to endorse or push back on colleagues' signals that officials are in no rush to raise interest rates this month, saying the central bank was no longer in the business of previewing its decisions
- Reuters: Fed's Goolsbee on inflation: discouraging, but still some optimism
Neutral market summary for information only; not investment advice.
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