The Bureau of Labor Statistics posted producer price index data that is a warning for investors. In January, the U.S. PPI increased by 0.5% Y/Y, 20 bps higher than expected and up from 0.4% in December.
The data also contradicts the Consumer Price Index report issued in January. CPI increased by just 0.2% that month and by 2.4% for the year.
Bond investors flocked to U.S. bonds. The iShares 20+ Year Treasury Bond ETF (TLT) increased by 1.58% last week and is up nearly 3.7% in the month. It closed at $90.82.
The PPI rose by 2.9% Y/Y. Core PPI, which excludes food and energy, rose by 0.8% in the month. Wholesale level inflation rose as businesses struggled with the economic uncertainties caused by tariffs.
The major indices reacted poorly to the data. On Friday, the Dow lost 521 points to close at 48,977.9. Nasdaq (QQQ) lost 0.25% for the week, while the SP 500 (IVV) (SPY) fell by 50 bps. Watch out for the SPY ETF, in particular. The index is trading in a narrow trend of $680 to $697 that began in late October.
YTD, world indices are outperforming the S&P 500. South Korea (EWY) is up by 48.1% this year. Samsung (SSNLF) and S.K. Hynix, which produce computer memory chips, accounted for the bulk of those gains. India (INDA) is down 4.2% YTD despite signing a historic trade deal with the European Union.
Related Stories
