March PPI showed declining inflation for producers

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Published Date 4/11/2025

Yesterday a few Fed officials were talking and made a point the Fed will have to make sure to throw a wet blanket over inflation expected to result from higher tariffs. “I intend to keep my eye squarely focused on the outlook for inflation,” said Kansas City Fed President Jeffrey Schmid; Dallas Fed President Lorie Logan stressed “it will be important to keep any tariff-related price increases from fostering more persistent inflation.” Boston Fed President Susan Collins said that U.S. economic growth would be slow early this year from the surge to get ahead of tariffs, but this should unwind and boost GDP over the next few months. Minneapolis Federal Reserve President Neel Kashkari said this recent market trends show investors are moving away from the U.S. “Normally, when you see big tariff increases, I would have expected the dollar to go up. The fact that the dollar is going down at the same time, I think, lends some more credibility to the story of investor preferences shifting.”

March PPI this morning mirrored yesterday’s CPI showing inflation in March declined. Month/month expected +0.2% declined -0.4%, year/year thought to be +3.4% dropped to +2.7%; core month/month -0.1% against estimates of +0.3%, year/year core estimated at +3.6% reported at +3.3% from an upward February revision to 3.5%. Prices for core services providers fell by 0.2%, while trade services dropped 0.7% and transportation fell 0.6%. In turn, core goods costs rose by 0.3%. From the previous year, core producer prices rose by 3.3%, the least in six months, from the 3.5% in February. Inflation in March fell much more than thought but like yesterday it doesn’t carry the normal amount of influence with the tariffs widely expected to increase inflation.

It is the beginning of earnings season, a season the lasts for months. Banks start the ritual, today JP Morgan/Chase, Morgan Stanley Wells Fargo, Black Rock among those reporting today.

The looming trade battle and the growing view that inflation will increase allows a lot of data for March and Q1 to be less important. Its difficult to find anyone that doesn’t believe inflation will increase here and globally. US and China keep going tit for tat; the US jumps tariffs, China jumps right back; China at 125%, the US at 140%. The unfortunate reactions to the US tariffs, global and US investors are turning away from US investments, the dollar has collapsed over the last three months (dollar assets lose), the 10 year one week ago hit a low of 3.90% before closing at 4.00%, this morning at 4.52%.

At 9:30 am the DJIA opened -100, NASDAQ -32, S& -14. 10 year at 9:30 am 4.50% +7 bp. FNMA 6.0 60 year coupon at 9:30 am -33 bps from yesterday’s close and -58 bps from 9:30 am yesterday.

At 10 am the April mid-month consumer sentiment index thought to be at 55.0 from 57.0 at the end of March, the index at 50.8.

Source: TBWS

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