LIVE MARKETS-Two-fer Tuesday: Import costs and Empire State

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TWO-FER TUESDAY: IMPORT COSTS AND EMPIRE STATE

A pair of also-ran indicators on Tuesday stood on opposite sides of the inflation fence, but appeared to agree on the subject of softening demand.

The cost of goods imported to the United States USIMP=ECI (excluding tariffs) defied expectations by dipping 0.1% in February, per Labor Department Data.

Consensus called for no monthly change.

And there would have been no monthly change without the 1.5% drop in the price of imported gasoline. Food, feed and drink inched 0.1% higher, while consumer goods excluding autos slipped 0.2%.

"Global oil prices as well as many other commodities have declined markedly in April as markets price in decreased demand due to the developing trade war," writes Matthew Martin, senior economist at Oxford Economics.

Year-over-year, import prices are up a 0.9%, a fairly abrupt deceleration from March, which was also revised lower, to 1.7% from 2.0%.

Annual import price growth is now well south of Powell & Co's 2% annual inflation target.

However, import/export prices differ from other major inflation indicators with things like currency exchange rates and foreign demand thrown into the mix.

Here's a chart that shows annual import/export price growth against the dollar index, which tracks the greenback against a basket of world currencies.

Shifting gears, New York State factory activity has fallen at a shallower pace this month than economists anticipated.

The New York Fed's Empire State index USEMPM=ECI printed at -8.1, less dire than March's -20.0, which was the lowest reading in over a year. Analysts expected a steeper drop at 14.5%.

A negative Empire State reading indicates monthly contraction.

Drilling down, the new orders component improved to -8.8 from -14.9 and the employment contraction decelerated to -2.6 from -4.1.

Among the report's grimmer aspects: 6-month expectations slid into contraction, falling to -7.4 from 12.7 in March.

And prices paid, an inflation predictor, continued to heat up, rising 5.9 points to 50.8. Rising input costs amid plunging demand raises the stagflation specter.

"This survey provides a mixed picture of the initial impact of the new tariffs on the manufacturing sector, but we see enough in the details to signal a big hit," says Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "Companies anticipate a sharp downturn ahead."

"It is reasonable to think that the new tariffs, supply chain disruptions, and intense uncertainty around the future state of trade policy are all weighing heavily on the sector, and are likely to push up core goods inflation considerably," Allen adds.

(Stephen Culp)

FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:

GATHERING SOME STEAM - CLICK HERE

S&P 500 INDEX: CAN IT BUILD BACK BETTER? - CLICK HERE

RECOVERING FROM PEAK TARIFF PANIC - CLICK HERE

HUMPTY DUMPTY HAS FALLEN, BUT HARD DATA DOESN'T YET SHOW IT - CLICK HERE

EUROPE INC EARNINGS: "RISKS TO THE DOWNSIDE" - CLICK HERE

BARCLAYS RECOMMENDS LONG 5-YEAR US TREASURIES - CLICK HERE

BOUNCING BACK - CLICK HERE

EUROPE BEFORE THE BELL: LVMH EARNINGS WREST FOCUS FROM TARIFFS - CLICK HERE

MORNING BID: TAXES AND TARIFFS ON THE MIND AS RELIEF RALLY LIMPS ALONG - CLICK HERE