Good News on Inflation & Jobs Today

Producer prices rebounded 0.5% m/m in April, but we still see encouraging signs that inflation will continue to moderate. Even if progress on PPI inflation is stalling, it looks in line with pre-pandemic readings and at a reasonable enough level to achieve the Fed’s 2% target for the PCED by the end of the year. Here’s our quick takes on today’s economic numbers which are bullish for both bonds and stocks, on balance in our opinion: 

(1) April's jump in the PPI came off a sharp downward revision in the March print from 0.2% to –0.1%. Another positive development is that the PPI final demand for personal consumption was flat on both a headline and core basis at 2.4% and 2.6% y/y (chart).