Prepare to jump on the deflation band wagon this week, if you haven’t already grabbed an early seat.
The Wall Street Journal describes how the producer price index (PPI) is expected to rise just 0.1% vs. March, when April data is released today at 8:30AM. The year-over-year gain will thus likely come in at 5.6%, which will suggest that March’s 6.1% year over year PPI increase was the peak.
Moreover, Wednesday’s consumer price index (CPI) data is likely to hammer the point home even further, as core inflation (not including volatile food and energy prices), is expected by the street to rise just 1%, well below the Federal Reserve’s target range of 1.5% – 2% according to the WSJ.
Should consensus estimates prove correct, it’ll justify lower interest rates for longer, and perhaps current U.S. 10-year treasury yields of just 3.47% will suddenly look appealing if inflation is dead. We’ll know later this morning…