U.S. producer prices rose 0.3% in October, below the 0.4% forecast, while annual growth accelerated to 6.5%. Markets priced an 89.4% chance of a 25-basis-point Fed rate hike in December, and the 10-year Treasury yield rose to about 5.13%.
The producer price index rose 0.3% in October, slowing from September’s upwardly revised 1.4% increase and coming in below the 0.4% forecast. Annual growth accelerated to 6.5% from 6.3%, just below estimates. Excluding food and energy, prices rose 0.3% month over month and 5.0% year over year, both in line with forecasts.
Energy prices dipped 0.1% after a 10.0% increase in September, while food and transportation prices rose 1.3% and 2.0%. Core PPI, excluding food, energy and trade services, increased 0.5% for the month and 4.9% year over year. Chris Osmond of Fifth Third Wealth Advisors said broader inflation could make it harder for the Federal Reserve to treat price pressures as temporary.
Markets priced an 89.4% chance of a 25-basis-point rate hike at the December Fed meeting, up from 85.5% a day earlier; the chance of a 50-basis-point hike fell to 10.6% from 14.5%. The Nasdaq fell about 1.5%, the S&P 500 about 0.8%, and the Dow edged lower. The 10-year Treasury yield rose to about 5.13%.
