February Business Inflation Non-Existent at -0.6%. Rates Steady. (Data downloads, charts)

The US Producer Price Index, which measures inflation at the business and manufacturing levels of the economy, was -0.6% in February and 4.4% year-over-year through February. Excluding volatile oil and food costs from the readings, “Core” PPI for February was 0.1% and 1% YOY through February. These monthly “All” and “Core” numbers were lower than expected. Rates are steady on this morning’s news, and so far rates aren’t reacting negatively to this morning’s announcement of next week’s 2yr, 5yr, and 7yr Treasury Note auctions. Tomorrow’s consumer inflation number will give us another key inflation signal to follow today’s.

You can click the Monthly ‘All’ and ‘Core’ PPI reports in our Data section (on the lower right side of the site) or going to our full data page, and it will display a chart where you will see the monthly see-saw as inflation rises and falls monthly, which contributes to rate volatility. A lot of this has to do with oil price volatility, which you can also see by scrolling to the Data section. On surface level, market sentiment seems to be that inflation shouldn’t be an issue for some time because aggregate demand is compromised by weakened consumers and businesses, and reports like today’s confirm that. But it seems to be every other month that inflation fears flare up, and bonds trade wildly as inflation expectations are reconciled.