Something for the Newbies in the industry. Explained this on 4 occasions this week, thought it might be nice to post about it. The PPI, released by Bureau of Labor Statistics measures the change in prices received by producers of goods and services. Significance Based on the Producer Price Index, investors can anticipate the chances of inflation in the nearest future, as prices at the producer level get transferred to consumers, influencing Consumer Price Index (CPI). If the prices paid by producers increase, the producers can either pass the increase in price to the consumers or take a profit cut. Depending on various factors such as competitiveness of the market. Although the CPI has more impact when anticipating the chances of inflation or determining interest rates, the PPI provides early signals in the production phase. Since the possibility of low inflation increase chances of lower interest rates, which is good for profit. The equity market moves alongside the bond market. If PPI falls, bond prices are expected to rally, and if PPI increases more than expected bond prices are expected to fall. Always keep in mind there are various other factors that might cause prices to move the other direction than expected. Please note that there is a risk of loss in futures and options trading. The valuation of futures and options may fluctuate, and clients may lose more than their original investment. Futures and options trading is not suitable for everyone. Past performance is not an indication of future results Pitbase
I believe so too. At least I believe we are not done with increasing interest rates. Just my personal opinion. I might be totally wrong of course