Name: Wholesale inflation softer than expected
Uploaded: 2026-01-14T17:32:28.714Z
Duration: 5 min 20 s
Description: The U.S. Producer Price Index (PPI) for November showed a 3% year-over-year increase, marking the highest annual rise since July, with the core PPI also at 3%.

The U.S. Producer Price Index (PPI) for November showed a 3% year-over-year increase, marking the highest annual rise since July, with the core PPI also at 3%.

The U.S. Producer Price Index (PPI) for November showed a 3% year-over-year increase, marking the highest annual rise since July, with the core PPI also at 3%. When excluding food, energy, and trade, the year-over-year increase reached 3.5%, matching levels last seen in March. Retail sales for November rose by 0.6%, the strongest since June of the previous year, with core retail sales also showing solid gains.

Despite the warmer inflation data, the 10-year Treasury yield remained steady at 4.16%, and analysts suggested that expectations for further interest rate cuts may be tempered unless the labor market weakens. The current account deficit for the quarter was reported at $226 billion, significantly lower than the record deficit seen in early 2023.

Wholesale inflation softer than expected

And here we go, we're getting very close to the release and it's hitting the wires now. On the producer price index, this is November, I don't have October, so the comps get a little weird. Up two-tenths as expected. Strip out the all-important food and energy. Good news, unchanged. That's definitely much cooler than we were expecting. And without the October read, what I would say is that unchanged would be the smallest going back to August when it was down one-tenth of a percent. Let's strip out food and energy and trade, and it's up two-tenths as expected. Now here we go, on the year-over-year numbers, in my opinion, the most important. Year-over-year final demand, three percent. Hot, hot. Three percent's hot. I don't know what October was, but that would be the hottest since July when it was 3.2 percent. If you strip out food and energy on the core, it's also three percent. Much warmer than a 2.7. Strip out food, energy, and trade. The one I wanted to be more under three percent, exactly the opposite. It gooses up to 3.5 percent. That would equal March, and to find a higher number, you're going back to Feb when it was 3.6. Asterisk, I don't have October, so I have one month missing when I'm doing the comps. That's the money ball number in terms of the negative aspects of this report. Retail sales for November, a powerful up six-tenths on the headline. That would equal July to find a stronger number. You're in June of last year when you're up one percent. Strip out autos, it still remains rather strong. Up half of one percent. Stronger than what you're anticipating. Much stronger than the revised up two-tenths in the rearview mirror. Strip out autos and gas, and it's still hot. Up four-tenths, better than expected. Equals the slight downward revision of last month from half a percent to up four-tenths. And the core retail sales number, up four-tenths. That's also strong. Now it's as expected, and it's definitely weaker than the six-tenths in the rearview mirror. But this series has been running pretty strong of late, so we want to pay attention to that. Now, I'm not quite done yet. The cousin to the trade balance, the current account balance, expected to be a minus sign of $238 billion. Comes in roughly in that area. Minus $226 billion. Last month ends up slightly under $250 billion at $249 billion. All minus signs. Now, what is the absolute record in this series? It was the first quarter, March, the quarter ending in March, it was minus $439,000, Joe. This metric goes back to 1960, and of course that was the biggest ever. So even though minus $226 doesn't sound good, it's significantly less than minus $439,000. Now, after all of that, where are we? Well, we're hovering right now at $416 on a 10-year. Where were we before that litany of numbers? $416. So we did see some volatility, but not a lot of attention was paid to those much warmer PPI, wholesale year over year numbers. I'm a little surprised, and just because it's not affecting the market right now doesn't mean it's not going to affect it as time goes on. I would definitely look for these numbers to once again push that 10-year to test that 4.20%. We haven't closed above it in over four and a half months. It really has been a tight range and long dated treasuries. Joe, back to you. You know, I hope I didn't have my heart set on more rate cuts. I don't know how weak the labor market would have to appear to get any this year with numbers like, if it were to continue, the numbers that you just gave. There's just no way. I couldn't agree more. And you know what? In many ways, this may be at the epicenter of everything going on with the Fed chairman. Listen, I'm not going to weigh in too deeply. I have no idea who's innocent, who's not innocent, who did what, who brought it. All I can tell you is that if I was chairman of the Federal Reserve, I'm not sure I would have played 2025 much differently than the current chairman. And as far as your comments right now, I couldn't agree more. With these numbers on the warm side year over year, you got to kind of run in place for a while until you get better data on the labor market, which looks like it's re-upping to many anecdotal facts. Yeah. What did this this time, Rick? I mean, if you had to point at something and say, aha, for a while it was hotter than you thought, for sure. What is it? Yeah. You know what, Joe? I don't know that I could even make a guess on this on the wholesale side. I'm sure that somehow they're going to connect the political dots to issues that maybe do the tariffs or whatever. But in my opinion, I really do question some of the accuracy of some of these numbers. But boy, that's well outside the realm of expectation. So most likely, there is some smoke where there is fire.

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