It felt like we saw the first rally in a while this week, as the market started pricing in not as aggressive. That rally came to an end as more Fed speakers rattled the markets and caused the 10-year to rise to the 2.82% level, which is a resistance level. Looking at the headlines, the comments made weren't too out of bounds, so we aren't sure why the market sold off as hard as it did besides it being an early close and that was the path of least resistance. It is best to be safe here as this is a choppy, volatile market.
Initial Jobless Claims
Initial Jobless Claims were up 18k to 185k for the week of April 9th from a revised 167k in the prior week (orig. 166k). The 4-week moving average of headline claims rose 2k to 172.3k, still the second lowest in the history dating back to 1967. Continuing claims, which lag a week, fell from 1.523mln to 1.475mln, setting another new low since 1970. The number of claimants in all programs for the week of March 26th fell -20k to 1.703mln, the lowest since November 2019.
Retail Sales rose .5% in March, with sales ex-autos up 1.1%, and the core control group down -.1%. The overall YoY rate fell from 18.2% to 6.9%, while the control core group dropped from 13.3% to 4.4%, its lowest since May 2020. Revisions to February's numbers were positive, with headline sales up from .3% to .8%, ex-autos from .2% to .6%, and control group up from -1.2% to -.9%. Looking back at the report for March, the jump in gas prices led to stronger gas station sales of 8.9%. The other major contributor was general merchandise stores, which added 5.4%, followed by grocery stores up 1.0%, restaurants/bars 1.0%, and clothing up 2.6%.
Producer Price Index
The Producer Price Index (PPI) on headline was up 1.4% in March, while the core index (ex-food/energy) was up 1.0%. Looking YoY, headline PPI is up from a revised 10.3% to now 11.2%, while the core read is up from 8.4% to 9.2%. Looking at another core measure, which strips out food, energy, and trade services, we see a rise of .9% on the month and a YoY read at 7.0%. Within the report, another large surge in energy, up 5.7%, was a big contribution to the headline, while the food index had a nice jump as well, up 2.4%. On the services side, transportation and warehousing ( 5.5%) provided the bulk of the increase in the core measure.
Consumer Price Index
The Consumer Price Index (CPI) rose 1.2% in March on headline, with the core measure (ex-food/energy) up only .3%, which is the smallest increase in 6 months. Looking YoY, headline CPI rose .6% to 8.5%, and the core's rose .1% to 6.5%. Within the report, as expected, the loss of Russian supply meant energy made a big contribution to the headline, up 11% including an 18.3% rise in gasoline prices. The food index also rose strongly, up 1.0% for the second consecutive time, and now up 8.8% on the YoY measure. Food at home was up 1.5%, while food away from home was up only .3%. Within the core, we see a drop in the used cars and trucks index, down -3.8% which is the largest monthly decline since 1969, though that index is still up 35.3%. New car prices were only up .2% in March; however, expectations are still that the Ukraine war will put further strain on those prices ahead. In other sectors, the shelter index was up .5% on the month, the apparel index up .6%, and medical was up .5%. This will be the last consumer inflation report before the Fed meets on May 2-3, and while the headline gain will be addressed, most will be pointed toward the war in Ukraine and that price pressures in the core could be slowing.