Little bit goes a long way Little bit goes a long way\images\insights\article\georgia-downtown-small.jpg May 20 2024 May 20 2024

Little bit goes a long way

Weekly Cash Commentary

Published May 20 2024

Inflation metrics are being watched so closely these days that even the slightest change makes news. Case in point was last week’s Consumer Price Index (CPI). After CPI, the Personal Consumption Expenditures and the Producer Price Index (PPI) measures all pausing on their way down from multi-decade highs—at least we hope—the markets have been looking for declines of any magnitude. Investors got bad news and then good news on the front last week.

First, the bad. On Tuesday, the government reported that PPI came in hotter than expected in April. The month-over-month (m/m) figure was 0.5% growth versus March’s -0.1%, and the annualized number was 2.2% compared to 1.8%.

Then, the good. The very next day, April’s CPI report showed that both m/m and annualized retail prices grew slower in April than March. Not by much: 0.3% m/m versus March’s 0.4%, and annualized at 3.4% compared to March’s 3.5%. But it was enough for the markets to think the Federal Reserve might still cut rates this year, even if just once, and avoid a slowdown.

Tags Markets/Economy . Liquidity .

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

Consumer Price Index (CPI): A measure of inflation at the retail level.

Personal Consumption Expenditures Price Index (PCE): A measure of inflation at the consumer level.

Producer Price Index (PPI): A measure of inflation at the wholesale level.

Issued and approved by Federated Investment Counseling