US producer price growth has accelerated at the highest rate since 2010

2021-09-12T18:56:14
highest rate since 2010 Oil gets a lot of support US producer price growth
...

US producer price growth has accelerated at the highest rate since 2010 and European markets are declining

US producer price growth has accelerated at the highest rate since 2010: The past week has been full of events that have affected the trading markets,
and so this week, when traders are waiting to announce some important economic data that will determine their trading destination. 

Evest follows the performance of global markets in the following report.

 

Topics:

  1. US producer price growth has accelerated to the extreme in 10 Years
  2. Oil gets a lot of support
  3. Bearish predictions for the precious metal

 

US producer price growth has accelerated to the extreme in 10 Years

Statistics published in the United States on Friday showed an acceleration in the U.S. producer price growth rate in August to an extreme of 8.3% per year since November 2010. 

In July, prices rose by 7.8%, and experts expected them to rise by 8.2% in August.

Producer prices rose 0.7% in August, compared to the previous month, after rising 1% in July.

Analysts had predicted a rise of 0.6% on average.

The new key rate slightly exceeded the neutral interest rate pass of 5-6.5%.

The month in which seasonal food deflation factor in past years has strongly affected consumer price inflation. 

Analysts predicted that the regulator would raise the key rate by 0.5 percentage points, to 7% overall, with the fact that monthly inflation in August grew slower than in previous months, and raised by only 0.17% in July, showing the slowest growth in the month since then. 

US producer price statistics showed record annual gains in August.

However, the market has focused on the fact that the pivot index has slowed down significantly.

In addition, the US market is seeing positive signs from talks between US and China leaders.

 

Oil gets a lot of support

Western media reported this evening, according to a statement by the Chinese Food and Strategic Reserves Administration, that the People’s Republic of China is planning for the first time to sell oil from state reserves through public auctions, which will improve the situation of domestic refineries. 

In a statement, the Ministry said that the move “will better stabilize supply and demand in the domestic market and effectively ensure energy security in the country.”

Meanwhile, the volumes of raw materials planned for sale have not been determined.

Oil prices rose after negotiations between the presidents of the People’s Republic of China and the United States, which reduces the risks of geopolitical and economic confrontation. 

For its part, the Libyan National Oil Company announced the resumption of oil shipments in the previously banned ports of Hariga and Sidr. 

Oil is supported by news from the United States, where the recovery of production in the Gulf of Mexico is delayed. 

Producers in the Gulf of Mexico are still unable to resume full production after Hurricane Ida hit the region.

According to official data, energy, which provides about 77% of the region’s oil and natural gas production, remains pending.

Production recovered only 25% of total potential, which means that the US is losing up to 1.4 million barrels of daily production. 

Thus, the total toll since production ceased before hurricane Ida has already exceeded 20 million barrels.

If the situation continues largely over the next week, losses could reach 30 million barrels,
and this will already have an impact on the market in the future for several months.

Since the beginning of this week, the price of Brent crude has risen by 0.2% and West Texas Intermediate by 0.3%.

According to analysts

According to analysts, West Texas Intermediate crude is trading at $67-71 per barrel for about a week now, and Friday’s rally appears to be a “normal bounce within that range.” 

Currently, the price is not as high as $70 per barrel, which suggests that the rally in the market,
perhaps more associated with the closure of “short” positions by traders on the eve of the weekend, than with the resumption of the rally.

Rallies in Asia.. declines in Europe and the United States

Stock indices in Asia rose on Friday.

Japan’s Nikkei 225 index rose 1.3%, China’s Shanghai Composite -0.3%, and Hong Kong’s Hang Seng -1.9%.

Europe’s morale deteriorated in the evening, as DAX, CAC 40 fell by 0.1-0.3%, respectively, the FTSE cut growth to 0.1%,
and the United States is declining, with the S&P 500 index falling by 0.3٪.

 

Bearish predictions for the precious metal

The weekly predictions for gold prices indicate a bearish scenario in which the US dollar gains momentum from rising US bond yields and the Fed’s low predictions.

The new week’s quiet start saw a gold boost from the previous week’s gains.

Gold fell 1.6% on Tuesday as risk-aversion markets helped the dollar find support after the Labor Day holiday. 

It recovered a small part of its losses on Thursday but lost about 2% for the week as a whole.

The market forecast for August exports was 17.1%, but the data showed an increase of 25.6%. 

Moreover, Eurostat reported that eurozone GDP rose 2.2% on a quarterly basis in the second quarter, exceeding analysts’ expectations of 0.6%.

However, despite these optimistic statements, global stock market morale has deteriorated. 

In turn, the US dollar index (DXY) rose by 0.35%, causing the yellow metal to decline.

We will start the week with the release of the US Consumer Price Index (CPI) on Tuesday.

Loretta Meister, the president of the Federal Reserve Bank of Cleveland said on Friday that she sees the risks of rising inflation forecasts
and said they should start decreasing before the end of the year.  

Similarly, Rafael Bostic, chairman of the Atlanta Federal Reserve Board,
said that a gradual decrease would be appropriate sometime this year. 

Investors may begin to consider reducing the Fed’s asset purchases if the consumer price index is stronger than expected, and vice versa.

Consumer confidence data from Michigan University will be released on Friday just before Thursday’s Philadelphia Fed Manufacturing report.

US producer price growth has accelerated at the highest rate since 2010

brandfooter