Wholesale Inflation Fell Sharply in April

Treasury prices are slightly higher this morning following this morning’s Producer Price Index report from the Bureau of Labor Statistics. According to the BLS, headline PPI fell by 1.3% last month against an expected decline of just 0.5%. The year-over-year rate plunged to a deflationary minus 1.2% versus an anticipated decline to minus 0.4%. Without food and energy, core PPI slipped 0.3% while pre-market surveys suggested a fall of just 0.1%. The year-over-year core rate fell to 0.6% against an expectation of 0.8%.

This will surely be on the mind of Fed Chairman Jerome Powell when he addresses the Peterson Institute of International Economics later this morning. Investors will be listening for clues to further steps the central bank might or might not take as more economic pain awaits our slowly reopening economy.

The Treasury will also be selling $22B Thirty-Year Bonds today as prices rise slightly all along the yield curve. The benchmark Ten-Year’s yield rests at around 65 basis points with WTI little changed at around $25/barrel while gold enjoys an $8 rally to around $1,711.