November PPI inline

The November headline Producer Price Index (PPI) showed no change (0.0%), aligning with market expectations. This result follows a revised 0.4% decrease in the previous month, initially reported as a 0.5% contraction. On an annual basis, the PPI increased by 0.9%, which is slightly below the anticipated 1.0% and represents a decline from the previous month's adjusted figure of 1.2% (originally 1.3%).

This is the lowest annual PPI since June!

The Core PPI, which excludes food and energy costs, also showed no change (0.0%), which is softer than the expected 0.2% increase. This figure remains the same as the previous month's reading. The annualized core PPI rose by 2.0%, falling short of the expected 2.2% and marking a decrease from the prior month's 2.3% rate (initially reported as 2.4%). This is the lowest annual core PPI since January 2021.

Additionally, the core PPI excluding food, energy, and trade services increased by 0.1%, which is below the consensus estimates. The annualized rate for this measure decreased by 0.3 percentage points to 2.5%.

These PPI figures follow the November Consumer Price Index (CPI) report, which was generally in line with expectations, indicating upward pressure from services, but a significant drop in energy prices.

The PPI report supports the narrative of disinflation (slowing inflation). After the release of the PPI data, U.S. Treasury yields fell across the board, with a notable approximately 5 basis points decline in the 2-year yield, which is particularly sensitive to policy changes.