BUZZ-COMMENT-US PPI matters more to markets than usual
Jan 13 (Reuters) - Since the beginning of 2021, U.S. PPI has been released prior to the CPI report in 8 out of the last 48 occasions (17% of the time).
This week will be another one of those occasions and therefore is likely to be more market moving than is often the case, particularly with increased concerns that inflation may again be grinding higher.
Looking at the monthly PPI data relative to expectations, there is little in the way of notable predictive power in the PPI data for CPI; in fact, the hit rate is around 43%. Despite this, traders are still likely to use the PPI report to gauge the potential CPI outcome.
That said, when the deviation from expectations in the monthly PPI is 0.2 percentage point or more, the hit rate is at 68%. In turn, the larger the surprise in expectations, the more likely CPI will follow in the same direction.
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(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
((justin.mcqueen@thomsonreuters.com))
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