Following a Monday which saw the market’s rally stall following the 11% reflex rally off the Christmas Eve low, Tuesday will feature the first major economic data release of the week with the Producer Price Index for December. Clearly, with all eyes on the Fed and possible rate hikes in 2019, any sign of weakening prices at the producer level should give the Fed room to be “patient” in raising short-term interest rates. From a political framework, the U.S. government remains in a partial shutdown, the U.K. Parliament is taking another Brexit vote that could determine the future of separation from the EU, and China is sending signals of increased stimulus to help their sagging economy. With all that taking place today, we see no real trading edge given the near-term overbought condition in the major equity indices.
At 8:30 A.M. EST, the Producer Price Index for the month of December is due out, with inflation expected to remain basically unchanged. On a m/m basis, headline PPI is expected to decline by -0.1% compared to a rise of +0.1% in November while core PPI is expected to rise by +0.2%, compared to a rise of +0.3% in November. On a y/y basis, headline PPI is expected to rise by +2.5%, the same as in November, while core PPI is expected to rise by +2.9%, up from +2.7% in November.
Past performance is not a guarantee of future results. All market data points and expectations are from Bloomberg as of 12/18/2018, and should not be relied upon as current thereafter.
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