Dow pulled back 135, decliners modestly ahead of advancers & NAZ went up 9. The MLP index slid lower in the 178s & the REIT index fell another 4+ to 466 after yesterday's sharp decline. Junk bond funds fluctuated & Treasuries were in demand, raising Treasury yields. Oil added 1+ to the 69s & gold was off 2 to 1797.
AMJ (Alerian MLP index tracking fund)
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Producer prices climbed at the fastest annual pace on record for the 5th consecutive
month in Aug as supply-chain disruptions & materials shortages
continued to put upward pressure on costs. The producer price index for final demand jumped 8.3% year over year,
according to the Labor Dept. The reading was hotter than the 8.2%
increase that was expected & above
the 7.8% print recorded in Jul. The reading was the strongest since
recordkeeping began in 2010. Producer prices rose 0.7% in Aug, slowing from the 1% increase the month prior & the forecast for a 0.6% gain. Prices
for final demand services rose 0.7% last month, making for the the 6th straight monthly increase. More than 30% of the increase in
prices for final demand services was due to a a 7.8% rise in margins for
health, beauty & optical goods retailing. Final
demand goods prices rose 1% in Aug, accelerating from a 0.6%
increase in Jul. ½ of the gain was the result of a 2.9% rise in
prices for final demand foods. Core producer prices, which
exclude food & energy, climbed 6.7% annually & 0.6% in Aug. The forecast called for increases of 8.2% & 0.6%, respectively. The
annual increase was the largest since the data set began in 2014.
Producer prices surge 8.3% annually, fifth straight record gain
2 powerful business groups, the National Association of Manufacturers (NAM) & the National Retail Federation, stopped short of endorsing Pres Biden's plan requiring large companies to mandate vaccinations. NAM was adamant in its support of nationwide vaccination efforts, though it indicated concern about the potential implications of Biden's plan in the workplace. NAM Pres & CEO Jay Timmons asserted any requirement should be rolled out in a way that would not negatively impact operations. "We look forward to working with the administration to ensure any vaccine requirements are structured in a way that does not negatively impact the operations of manufacturers that have been leading through the pandemic to keep Americans safe," Timmons said. "It is important that undue compliance costs do not burden manufacturers, large and small alike." Biden said the Dept of Labor's Occupational Safety & Health Administration (OSHA) would enforce a rule requiring companies with 100 or more employees to mandate vaccinations or conduct weekly COVID-19 testing. The White House said the rule would apply to approximately 80M Americans. Companies that violate the directive could face penalties of $14K per violation. NAM, which represents 14K companies, praised Biden "for his continued focus on getting Americans vaccinated." The advocacy group began requiring its own employees to be vaccinated as of mid-Sep.
Manufacturers and retailers wary of Biden's private sector vaccine rules
Treasury yields rose as the producer price index showed that parts of the US economy are still contending with inflation. The yield on the benchmark 10-year Treasury note added 2.4 basis points, climbing to 1.324%, & the yield on the 30-year Treasury bond rose by 1.8 basis point to 1.917%. Yields move inversely to prices & a basis point is equal to 0.01%. The producer price index rose 0.7% in Aug, above the consensus estimate of 0.6%. The reading marked a slowdown from the 1% gain in wholesale prices for Jul but the index is now up 8.3% year over year, the largest increase since at least 2010. The index tracks the changes in selling prices received by domestic producers for their output & is one measure of inflation, which is another economic indicator being used by the Fed to determine its timeline for any changes to its policy. The more important consumer price index for Aug will be released on Tues. The Federal Reserve is watching the labor market recovery to help gauge when it will wind down its bond-buying program. The ECB announced yesterday that it will slow the pace of its asset-purchase program amid surging inflation.
10-year Treasury yield advances as producer prices rise more than expected
Dow Jones Industrials
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