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  • Writer's pictureRealFacts Editorial Team

PPI Data Release, Powell's Remarks, and Market Response

Jerome Powell

On Tuesday morning, the producer price index (PPI) data for April was released, revealing inflation levels that exceeded expectations. However, the report also included revisions to earlier data, which helped alleviate some of the concerns surrounding inflationary trends. Jed Graham, Investors Business Daily author wrote, “The PPI for final demand rose 0.5% on the month and 2.2% from a year ago. Wall Street economists anticipated a 0.2% monthly rise and a 2.2% gain from a year ago, according to Econoday.

The upside surprise on the monthly data but in-line annual increase implies downward revisions to prior data. The headline PPI for March was revised to -0.1% from 0.2%.” 

Additionally, when excluding food and energy, the PPI rose by 0.3% in April compared to the projected 0.2%. Nonetheless, the March data was also revised downward from 0.2% to -0.1%. These revisions underscore the importance of considering both current data releases and any adjustments to previous data for a comprehensive analysis of economic trends. Following the release of the PPI data, market expectations regarding the timing of the Federal Reserve's first rate cut remained largely unchanged. Market expectations for a rate cut at the Fed's July 31 meeting remained at 31%, while the probability of a cut by the September 18 meeting increased slightly from 64% before the data release to 66%.

Just hours after the PPI data was released Fed Chair Jerome Powell spoke at the annual general meeting of the Foreign Bankers’ Association in Amsterdam. During his remarks Powell emphasized the recent strong performance of the US economy, particularly highlighting the robustness of the labor market. Regarding inflation, he noted a significant slowdown from the beginning to the end of 2023 but expressed concern over the lack of progress in the first quarter of 2024. 

He said, “I expect that inflation will move back down”, however, “my confidence is not as high as it was.” During the question and answer portion of the meeting, he noted that a rate hike is possible but it's more likely that the next move by the Fed is a rate cut. Following Powell's remarks and the release of the latest PPI data, the market saw moderate gains, with all major indexes closing higher. Among them, the small caps represented by the Russell 2000 index, performed the strongest, ending the day up by over 1.1%.

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