The Bureau of Labor Statistics reported that the U.S. Producer Price Index (PPI) for final demand rose 6.0% year-over-year in May, coming in below the 6.4% consensus forecast. The annual rate remained flat relative to April, signaling a stabilization in wholesale price pressures. Core PPI, which excludes volatile food and energy components, rose 0.5% month-over-month, significantly lower than the 1.0% expected by economists and down from the 1.0% gain recorded in the prior month.
The softer-than-anticipated wholesale data offered a reprieve to global markets following Wednesday’s hotter consumer inflation report. U.S. equity futures rebounded as the cooling in production "pipeline" costs eased fears of an imminent Federal Reserve rate hike. Treasury yields retreated from session highs as investors balanced the mixed inflation signals against ongoing geopolitical volatility in the Middle East and persistent energy price uncertainty.