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Tameish Inflation Numbers

The Producer Price Index (the wholesale inflation gauge) popped up 0.9% in April, but the core number (the less volatile indicator that removes food and energy) was up a smaller than expected 0.1%.

Energy spiked a whopping 4% during the month, but the good news is that high oil prices continue to fail to seep into other price levels.

What's more, the Fed released two important pieces of data today.  Industrial capacity reached a 5-year high of 89.1% in April as industrial production rose 0.8% during the month.  It's that kind of bristling activity that frequently causes the economy to redline, prompting worrisome inflation.  The fact that we're still not seeing it is good news.

Tomorrow, the Labor Department will release the Consumer Price Index, which should yield additional insights into the inflation picture.  The markets are watching these figures (in addition to housing sales and the price of precious metals) carefully, as they're expected to be the primary driver of near-term Fed policy.

The seasonally adjusted rate of housing starts hit a 17 month low, which argues for dovish monetary policy, as Fed Chairman Bernanke has indicated that a housing slowdown is one metric he's watching as an important indicator of pushing rate hikes too far.

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Tameish Inflation Numbers

The Producer Price Index (the wholesale inflation gauge) popped up 0.9% in April, but the core number (the less volatile indicator that removes food and energy) was up a smaller than expected 0.1%.

Energy spiked a whopping 4% during the month, but the good news is that high oil prices continue to fail to seep into other price levels.

What's more, the Fed released two important pieces of data today.  Industrial capacity reached a 5-year high of 89.1% in April as industrial production rose 0.8% during the month.  It's that kind of bristling activity that frequently causes the economy to redline, prompting worrisome inflation.  The fact that we're still not seeing it is good news.

Tomorrow, the Labor Department will release the Consumer Price Index, which should yield additional insights into the inflation picture.  The markets are watching these figures (in addition to housing sales and the price of precious metals) carefully, as they're expected to be the primary driver of near-term Fed policy.

The seasonally adjusted rate of housing starts hit a 17 month low, which argues for dovish monetary policy, as Fed Chairman Bernanke has indicated that a housing slowdown is one metric he's watching as an important indicator of pushing rate hikes too far.