Treasury Action: price pressures seem to be firming
Treasury Action: price pressures seem to be firming, but the markets rather calm. The strength in January CPI, with gains of 0.5% and 0.3% for the headline and core caught the market's attention, and the pressures are being corroborated in other data. Today's PPI which posted 0.4% gains for both the headline and ex-food and energy. That headline figure is just off the 0.5% clip (hit in October and September of last year and a couple of other months before) which was the highest since September 2012 (0.7%). The core rate is also just off the 0.5% reading from October, which ties for the peak under the new "final demand" methodology. The prices paid components in the Empire and the Philly Fed indexes also increased, with the former's 48.6 the highest since March 2012, and the latter's 45.0 the highest since May 2011. Similarly, the January ISM's prices paid rise to 72.7 put it at its highest since May 2011. Import prices have posted gains over the past five months. The FOMC is widely expected to address the stronger growth and pick up in inflation with a 25 bp rate hike next month, and follow that up with a couple of more tightenings this year.