We used to be glued to the jobs report. Every month the analysts made predictions and then analyzed where they got things wrong. Then there is the quarterly growth data (GDP). Together with the jobs report, the markets reacted until the next set of numbers were released. Now we have another focus, or shall we say another shining data star.
Each month, the analysts are obsessing over the inflation numbers. The Consumer (CPI) and Producer (PPI) price reports are “where it is at” with the regard to influencing the stock and bond markets today. We are even reacting to inflation reports from Europe, because the entire world seems to be in the same boat. Last week, it was announced that the CPI increased by 7.7% annually, with the core number increasing by 6.3% annually. The core excludes the volatile components of food and energy. Overall, these numbers were seen as better than expected and the stocks and bond markets reacted very positively. Though this is only one month of data, it is hoped that this report represents the beginnings of the improvement we have been waiting for.
The Producer Price Report is being released today, which could get the markets riled up again. Keep in mind that these are not the only measures of inflation. When the jobs report is released, we also look at wage growth. There is also the GDP price index, which is released along with the quarterly economic growth data. Add in the PCE (personal consumption expenditures) price index, which is released monthly along with personal income and spending. Today, it is all about inflation and the wide range of data gives analysts and the Fed plenty to chew upon.