June Producer Inflation -Overall PPI Month/Month: -0.4% -Core PPI Month/Month: +0.3% -Overall PPI Year/Year: +7% -Core PPI Year/Year: +2.4% -Lower energy costs this month. This is also a time to remind that ‘Overall’ is a better macroeconomic indicator because it smooths out the volatility of energy and food prices.

Retail sales dropped 0.2% in May, the first drop in 11 months, but economists were expecting a 0.4% to 0.5% drop so stocks are rallying on the news plus some favorable earnings today (S&P 500 +16 to 1288).

Inflation: PPI core and overall Month/Month were +0.2% for May PPI core Year/Year was +2.1% PPI overall Year/Year was +7.0% – a reminder of how large the swings in food and energy have been.

The good news is that rates begin the May 16 trading week near 2011 lows. The bad news is that it’s because of a frail economy. Rates drop when bond prices rise, and mortgage bonds have rallied the last four weeks on lower home prices, weak GDP, and low core inflation.

The S&P 500 is down slightly, hovering around 1312, and bonds are also down slightly today after higher jobless claims, less-than-expected business inflation, and a favorable Treasury bond auction.

Stocks and rates are down midway through trading day following lots of market data. February housing starts, which measure new homes construction, were down 22.5% since last month, the worst monthly drop in 27 years. The February Producer Price Index (PPI), which measures business inflation, was up 1.6% since last month and has spiked 5.6% [...]

Rates are up today as inflation week rolls on. This morning’s reading of January producer prices shows a .8% increase since December and a 3.6% increase since January 2010. Stripping out volatile food and energy prices, the “core” readings showed a greater-than-expected .5% increase since December and a 1.6% increase since last year.

China’s NBS site delivering “Server Too Busy” errors right now. Reminiscent of early crisis days when S&P servers started crashing on Case Shiller Home price release days. Anyway, consumer prices came in at +4.9% versus expectations of +5.3% and last month’s year-over-reading of 4.6%. And producer prices came in at +6.6% versus expectations of 6.4% [...]

Rates closed Friday 2/11 net even on the week, a nice break (despite wild daily swings) after rising .375% the week before. Rates could resume their rise this week in response to inflation reports from the U.S., China, and Great Britain. Inflation worries may cause investors to continue selling bonds, and home loan rates rise [...]

Like most economic stats, inflation seems simple: it’s a measure of how consumer or business prices are rising in an economy. But how inflation is measured then interpreted by markets is less simple. Most inflation reports in the press—often referred to as ‘headline inflation’—are total consumer or business inflation numbers. But lots of effort goes [...]