Market Reports

Five Minute Macro 5-15-2023

Debt ceiling negotiations continue to drive risk appetite while recession and inflation concerns persist. The Fed continues to push back on market rate cut expectations and questions on China’s growth outlook enters the fray this week.

Five Minute Macro 4-3-2023

OPEC has put the Fed over a proverbial barrel with their surprise output cut, which has put into question last week’s signs of cooling inflation and raised investor’s concerns about growth prospect. Oil has reentered the top five while last week’s number one, the stresses in US and EU banking sector, has fallen to the bottom as policy responses have calmed fears.

Five Minute Macro 2-13-2023

Investors wary ahead of key inflation report as the Fed slows pace of hikes and hopes of a soft landing rise following a strong jobs report. A mixed 4Q earnings season wraps up and a surprise BOJ succession plan round out the top five this week.

 

Afternoon Markets Brief 2-10-2023

Summary and Price Action Rundown

US equities were mixed and Treasuries remained under pressure as economic uncertainty deepens ahead of next week’s consequential US inflation, retail sales, and industrial production data. The S&P 500 recouped early losses to gain 0.2% today, upping its gain on the year to 6.5%, though the Nasdaq lost 0.6% to cut its early 2023 rally to 12.0%. Overseas, the Euro Stoxx Index underperformed, erasing yesterday’s outperformance, while Asian equities were mostly lower overnight. Longer-dated Treasury yields continued to climb, with the 10-year rising to 3.74%, while the policy-sensitive 2-year yield ascended to 4.52%. The growth-sensitive 2/10 Treasury yield became less inverted, but is still sending an alarming recession signal. The broad dollar hovered above seven-month lows, fluctuating well below its recent multi-decade peak of late September. Oil prices jumped as Russia cut production, with Brent crude climbing above $86 per barrel.

US Consumers Cheer Up but Sentiment Remains Subdued Overall

With investors pondering the crosscurrents and contradictions in US growth and inflation figures, a prominent survey showed some positive signals, but overall conditions remain challenging. The University of Michigan consumer sentiment for the US jumped to a thirteen-month high of 66.4 in February from 64.9 in January, beating market forecasts of 65, preliminary estimates showed. The gauge for current economic conditions improved to 72.6 from 68.4 in the previous month, but the expectations subindex fell to 62.3 from 62.7. After three consecutive months of increases, sentiment is now 6% above a year ago but still 14% below two years ago, prior to the current inflationary episode. Meanwhile, inflation expectations for the year ahead went up to 4.2% from 3.9% while the five-year outlook remained steady at 2.9%. Overall, high prices continue to weigh on consumers despite the recent moderation in inflation, and sentiment remains more than 22% below its historical average since 1978. Combined with concerns over rising unemployment on the horizon, consumers are poised to exercise greater caution with their spending in the months ahead. – MPP view: Growth data around the world has been mixed but we think the trend is to the downside, despite very noisy and idiosyncratic US labor market data. Our base case has been that risk assets will remain in a relatively placid period into Q1 this year as inflation peaks while growth is still positive, but the risk is that the recession arrives more quickly than we have anticipated. Global recession is our base case for 2023 with the lagged effects of the current tightening and US dollar spike really beginning to bite with a 6-12 month lag. We are more concerned about length of the recession and lack of stimulus and support for the recovery than we are about the severity of the retrenchment.

Rent Eases Ahead of Key Inflation Data Next Week

The median US rent increased by 2.4% annually to $1,942 in January, representing the smallest annual rise since May of 2021 and cheapest level in about a year. January’s number reflected the eighth consecutive decline in rent growth rate, and median rent also decreased by 1.9% from the previous month. Signs of increasing supply and reducing demand have possibly contributed to the fall in rent growth. On the demand side, broader economic pressure makes renters hesitant to sign leases. On the supply side, the increase in the number of real estate projects and homeowners deciding to rent out their properties has oversupplied the market. Additionally, the nationwide rental vacancy rate has reached near bottom in the fourth quarter of 2022 and is projected to increase in 2023. The cooling in rent prices is expected to help reduce inflation in the US. – MPP view: We think inflation continues to improve but the moderation tapers off through midyear and price pressures remains sticky, eventually driving home the point that the Fed keeps trying to make that it is not going to be in a position to cut rates later this year even if growth is weak and a recession is underway.

Additional Themes

Canadian Labor Markets Also Post an Upside Surprise in January – The Canadian economy created 150 thousand jobs in January, the most since February last year and much more than the market expectations of a 15 thousand increase. Gains were driven primarily by people aged 25 to 54, split evenly between women and men in this group. Additionally, the unemployment rate held steady at 5%, just shy of the record-low 4.9% observed in June and July 2022, and below market forecasts of 5.1%, signaling that the Canadian labor market remains stubbornly tight. The total number of unemployed people stood at 1.0 million, similar to the level observed since the summer of 2022. Meanwhile, employment increased by 150,000 and the size of the labor force has continued to grow, as an additional 153,000 people joined the labor force, boosting the participation rate to 65.7%.

 

Adidas Suffers from a Promotional Disaster Adidas, the German sportswear giant, said late Thursday that it is assessing what to do with the Yeezy inventory, adding it has already accounted for the “significant adverse impact” of not selling the products. Operating profit would drop by about 500 million euros if the company fails to shift the products, and Adidas expects sales to decline at a high single-digit rate in 2023. The company also forecasted one-off costs of up to 200 million euros, leaving Adidas’ worst-case scenario for the year as a 700 million euro loss for 2023. Based on unaudited numbers, Adidas’ revenues increased by 1% in 2022, while operating profit dropped from almost 2 billion euros in 2021 to 669 million euros in 2022. Meanwhile, the company could lose around 1.2 billion euros ($1.3 billion) in revenue in 2023 if it is unable to sell its existing Yeezy stock. Shares sank 11% Friday morning as traders reacted to the announcements. “The numbers speak for themselves. We are currently not performing the way we should,” Adidas CEO Bjørn Gulden said in a press release.

Looking Ahead – Next week’s macro calendar centers around the highly-anticipated US Consumer Price Index figures for January, with the Producer Price Index also due. US retail sales and industrial production data for last month will be scrutinized for any signs of additional slowing. UK inflation and retail sales are also on the calendar, along with EU industrial production, Australian business and consumer confidence, and Japan GDP.

 

Latest Macrocast: America runs on trucking – On today’s Macrocast, hosts Meghan Pennington and John Fagan are joined by Loren Smith of Skyline Policy Risk Group to discuss the latest on the IRA and infrastructure spending, permitting reform and its impact on energy production, the debt ceiling, and more. Tune in here! https://marketspolicy.com/podcast-2/

Morning Markets Brief 2-13-2023

Summary and Price Action Rundown

Global risk assets were mixed overnight as sentiment steadies ahead of tomorrow’s potentially pivotal US inflation figures. S&P 500 futures are pointing to a slightly higher open after the index recouped early losses on Friday to gain 0.2% and pare the week’s losses to 1.1%, taking its gain on the year to 6.5%, though the Nasdaq lost 0.6% for weekly downside of 2.4% to cut its early 2023 rally to 12.0%. EU equities are registering a moderate advance, while Asian stocks were mostly lower overnight. Longer-dated Treasuries are attempting to stabilize, with the 10-year yield holding at 3.73%, while the growth-sensitive Treasury yield curve remains deeply inverted, conveying a grim recession warning. The broad dollar is slightly stronger as it continues to fluctuate well below the two-decade highs of late September. Oil prices are reversing a portion of last week’s rebound, which was extended by Russia’s production cut, with Brent crude slipping back to $86 per barrel.

US Inflation in Focus

Traders are tentative ahead of tomorrow’s US Consumer Price Index (CPI) reading for January amid concerns of a disproportionate market reaction to an upside surprise. Treasuries are steady this morning but suffered meaningful selling last week as market participants fretted about the upcoming CPI data in light of the stunning blowout in January jobs figures. Investors are concerned that if CPI similarly tops estimates, the Fed will make good on its threats to raise rates higher than fed fund futures currently are pricing and hold them there for longer than market expectations reflect.

 

CPI is expected to reaccelerate to a 0.5% month-on-month (m/m) pace from 0.1% m/m in December, while Core CPI is forecast to remain steady at 0.4% m/m, equaling the prior month’s cadence. These readings would translate into annualized CPI and Core CPI readings of 6.2% and 5.5%, respectively, versus 6.5% and 5.7% in December. The Producer Price Index (PPI) for last month is due on Thursday of this week and is similarly expected to pick up on a monthly basis but cool further on an annualized basis.

 

Meanwhile, TIPS breakevens, the key market-based gauges of inflation expectations, moved higher last week but remain at generally subdued levels. Specifically, breakevens on 5- and 10-year TIPS are now trading at 2.51% and 2.34%, respectively, significantly lower than their cycle tops of 3.73% and 3.03% last March and April. – MPP view: Our anticipation is that easing inflation, hopes for a soft landing, and the conclusion of the Fed’s tightening cycle leads to an “eye of the hurricane” period of market calm though roughly Q1. We doubt that this tentative optimism will be the start of a new bull market, as we see improvement in inflation stalling and price pressures remaining sticky at above-target levels while the global economy continues to slow into broadly recessionary conditions by midyear, with scant prospect of either monetary or fiscal stimulus sufficient to jumpstart the engines of growth.

 

As we noted in Looking Ahead – More Than Words (https://conta.cc/3YCGuLI), recent major macro events, data, and earnings, posed a potential challenge to the continuation of our “eye of the hurricane” thesis for Q1, particularly as investors begin to reduce their bets on Fed easing later this year. But on balance, we think that the broadly positive market tone can continue until crystalizing recession risks later this year, alongside the Fed’s stubborn unwillingness to ease policy, bring stormy conditions back to risk assets.

 

Mixed Earnings Season Wraps Up This Week

Fourth quarter (Q4) earnings season has offered little direction to overall indexes and has done little to clarify the outlook. With 346 of the S&P 500 companies having reported, 55% have topped sales estimates and 70% have beaten earnings forecasts with divergent price reactions to the early results. Peak earnings season is now considered over, but this week still features some reports from industry bellwethers including Coca-Cola, Deere, Shake Shack, Shopify, and Zillow. Palantir is the most prominent company reporting today, with its results due after the closing bell.

 

Broadly speaking, Q4 earnings season as brought nothing too dire or distressing but few major positives to cheer about either, and has reassuringly indicated that corporate America is not seeing recessionary conditions on the horizon. Corporate management is broadly wary of consumer fortitude later this year, and banks are preparing for deterioration in their credit books, but this cautious outlook is far from universal, with some sectors and companies expecting some very upbeat quarters ahead. – MPP view: Nothing in the results so far is a smoking gun for a recession or a wholesale downgrade of broader earnings expectations (though we believe that is impending later this year), so macro factors have remained the main driver of stocks at the index level. So with Q4 earnings season providing little overarching direction and raising as many questions it answered, we maintain our baseline view that Q1 will feature a broadly reflationary and optimistic dynamic that will prove supportive of a risk asset rebound that probably goes on longer than it should given the gathering recessionary winds that will blow through the economy later this year.

Additional Themes

Geopolitics Remain Tense Amid Reports of Downed Objects Over North America – Following the matter of the Chinese spy balloon, headlines over the weekend indicated that more objects have been detected and shot down by the US Air Force. Fewer details have been provided about the latest series of objects that were downed. Meanwhile, this morning, Chinese official media has alleged that multiple US spy balloons have been detected over China in recent years, keeping the heat under simmering US-China tensions.

 

Looking Ahead – This week’s macro calendar centers around the highly-anticipated US Consumer Price Index figures for January, with the Producer Price Index also due. US retail sales and industrial production data for last month will be scrutinized for any signs of additional slowing. UK inflation and retail sales are also on the calendar, along with EU industrial production, Australian business and consumer confidence, and Japan GDP.

 

Latest Macrocast: America runs on trucking – On today’s Macrocast, hosts Meghan Pennington and John Fagan are joined by Loren Smith of Skyline Policy Risk Group to discuss the latest on the IRA and infrastructure spending, permitting reform and its impact on energy production, the debt ceiling, and more. Tune in here! https://marketspolicy.com/podcast-2/

 

MPP 2023 Outlook Video  In our first video of the new year, Brendan, John, and Bob discuss the MPP financial market and policy outlook for 2023, which calls for a return to stormy conditions after the more placid conditions of Q1 deteriorate as the Fed withholds rate cuts despite a deepening recession. Markets Policy YouTube Channel Watch Here

 

Russell Napier: 2023 – 2038 Forecast for Financial Repression / New Rules for Investors – We hosted a very revealing, compelling, and entertaining macro strategy session with macro legend Russell Napier on Friday, January 29, 2023. Russell is predicting an era of financial repression that reverses many of the characteristics of successful investing – we think this will be very worth your time. The full interview is on the Markets Policy YouTube Channel Watch Here

 

Looking Ahead – More Than Words

January’s blowout US nonfarm numbers roiled Treasury markets and halted the 2023 stock market rally in its tracks, and although markets steadied in the middle of this week, traders began to look to next week’s US Consumer Price and Produce Price Index prints with genuine concern. Last month’s jobs data might well be an anomaly, but upside surprises from those key inflation readings, alongside the possibility that retail sales and industrial production data also top estimates, could cause a paradigm shift in the expectations for Fed policy. Following the jobs report, investors marked up the terminal rate of the hiking cycle from roughly 5.00% at the March meeting to 5.25% at the May FOCM decision, but expectations for rate cuts in the back half of the year persisted through midweek. Yesterday, however, traders began to meaningfully reexamine that longstanding assumption of late 2023 Fed easing.

 

In short, the constant refrain from Fed officials about higher-for-longer interest rates, which is our base case, has not convinced investors, but recent data has begun to change their minds. For the near term, we expect next week’s data to be reassuring to investors, with inflation continuing to moderate and growth indicators muted, but our longstanding view is that the eventual repricing of markets to align with the higher-for-longer interest rate reality will be a challenging period for risk assets and will mark the second half of the bear market that began in early 2022.

 

A few notes on the observed dynamics in rates markets over the past day:

  • The nonfarm payroll number accomplished what volumes of Fedspeak have failed to achieve – convincing markets that peak rates of this cycle are most likely to be above 5%. As the chart below of the fed fund futures September implied rates shows, Chair Powell’s commentary at the February 1st Fed decision actually put expected rates lower, and only the nonfarm payroll print on February 3rd elicited a meaningful reaction.

 

  • Initially, price action suggested that the January jobs number told us more about the Fed’s near-term reaction function than about how the economy will play out and how policy will need to evolve later this year. As of yesterday morning, Fed fund futures showed the two more rate hikes that were being priced in before the summer being taken back by January next year, presumably in the face of deteriorating US growth or a recession. In short, January’s jobs numbers were being taken as a headfake that the Fed falls for, only to have to unwind the tightening within months.

But yesterday, fed fund futures began to pretty dramatically reprice the outlook for Fed easing, as next week’s inflation figures and retail sales data loom.

 

Looking ahead, next week’s macro calendar centers around the highly-anticipated US Consumer Price Index figures for January, with the Producer Price Index also due. US retail sales and industrial production data for last month will be scrutinized for any signs of additional slowing. UK inflation and retail sales are also on the calendar, along with EU industrial production, Australian business and consumer confidence, and Japan GDP. Peak earnings season is now considered over, but next week still features some reports from industry bellwethers including Coca-Cola, Deere, Shake Shack, Shopify, and Zillow.

 

 

  • US Inflation Data (CPI & PPI)
  • US Retail Sales
  • US Industrial Production
  • UK Inflation & Retail Sales
  • EU Industrial Production
  • Corporate Earnings
  • Japan GDP
  • Australian Confidence Gauges

Global Economic Calendar: Super Bowl of economic data

 

Monday

 

The Westpac-Melbourne Institute Index of Consumer Sentiment for Australia increased 5% to 84.3 in January, rising for the second straight month and posting the largest monthly gain since April 2021. January was the first month since April last year not to oversee a spike in the RBA cash rate. Still, Westpac expects the Reserve Bank Board to continue its interest rate policy tightening at the next meeting on February 7. The Index has lifted a cumulative of 8.1% over the last two months, from a 78 read in November which might prove to be the lowest point for Consumer Sentiment in this cycle, though sentiment remains depressingly low. The improvement in January was mainly driven by sub-indexes for “economic conditions next 12mths” (10.2%), “family finances next 12mths” (6.6%), and “time to buy a dwelling” (4.4%). Expectations about the labor market also brightened, while expectations for house prices dropped 10.3%.

 

Australia’s NAB business confidence index rose 3 points to -1 in December 2022 but stayed in the negative territory for the second month and remained below its long-run average. Sentiment strengthened across most industries, except transport & utilities. Meanwhile, business conditions weakened, dropping for the third month (12 vs 20 in November) amid falls in sales (18 vs 27), profitability (12 vs 19), and employment (8 vs 13). The decline was broad-based, with all sectors moderating. Leading indicators suggested conditions might ease further, with forward orders edging down (3 vs 5) and capacity utilization relaxing above average at 83.7%. Price and cost growth slowed but remained elevated. “Momentum is clearly slowing though activity remains solid,” said NAB chief economist Alan Oster. “We know the full impact of rates is yet to fully flow through so the survey should give us an indication of the accelerating impact from rates over coming months.”

 

The Japanese economy shrank 0.2% quarter-on-quarter in the three months to September 2022, compared with flash data of a 0.3% fall and after a 1.1% growth in the previous period. The latest figure came amid an upward revision of both government spending (0.1% vs flat reading in the first estimate and after a 0.7% rise in Q2) and net trade with exports growing faster than initially anticipated (2.1% vs 1.9% in the flash figure and after a 1.5% previously). Meantime, private consumption was sluggish (0.1% vs 0.3% in the initial print and after a 1.7% rise in Q2), hit by another COVID wave in August and despite efforts from the government to step up support for households. Business investment growth slowed notably (1.5%, matching the preliminary print and after a 2.4% gain in Q2).

 

Tuesday

 

The unemployment rate in the UK was unchanged at 3.7% in the three months to November of 2022, the same as in the previous period and in line with expectations. The number of people unemployed for up to six months increased, driven by those aged 16 to 24 years. Those unemployed for over six and up to 12 months increased, while those unemployed for over 12 months decreased. The employment rate was estimated at 75.6%, largely unchanged, with the number of employees and part-time self-employed workers increasing while full-time self-employed workers decreased. Meanwhile, the number of job vacancies fell by 75K to 1.161 million, as uncertainty across industries leads to holding back on recruitment.

 

Annual CPI inflation rate in the US slowed for a sixth straight month to 6.5% in December of 2022, the lowest since October of 2021, in line with market forecasts. It follows a 7.1% reading in November. Energy cost increased 7.3%, well below 13.1% in November, as gasoline cost dropped 1.5%, following a 10.1% surge in November. Also, fuel oil cost slowed (41.5% vs 65.7%) while electricity prices rose slightly faster (14.3% vs 13.7%). A slowdown was also seen in food prices (10.4% vs 10.6%) while cost of used cars and trucks continued to decline (-8.8% vs -3.3%). On the other hand, the cost of shelter increased faster (7.5% vs 7.1%). Compared to the previous month, the CPI edged 0.1% lower, the first decline since May of 2020, and beating forecasts of a flat reading. Inflation seems to have peaked at 9.1% in June of 2022 but it still remains more than three times above the Fed’s 2% target. Additionally, core CPI, which exclude volatile items such as food and energy, went up by 5.7 percent from a year earlier, compared to a 6.0 percent rise in the prior month and mostly in line with market expectations.

 

Building permits in the US fell 1.0 percent from a month earlier to a seasonally adjusted annual rate of 1.337 million in December 2022, the lowest level since May 2020, as high inflation and rising mortgage rates hit demand for new housing, revised data showed. Single-family authorizations declined 6.4 percent to a rate of 731 thousand, the lowest since April 2020, while the volatile multi-segment rose 6.3 percent to 606 thousand. Permits were down in the South (-1.7 percent to 740 thousand), Midwest (-12.1 percent to 175 thousand) and Northeast (-2.5 percent to 115 thousand), but were up in the West (9.3 percent to 307 thousand).

 

Wednesday

 

Annual inflation rate in the UK fell to 10.5% in December of 2022 from 10.7% in November, matching market forecasts. It marks a second consecutive month of slowing inflation and the lowest rate in three months, after a peak of 11.1% in October. The largest downward contribution came from transport prices (6.5% vs 7.2%), namely motor fuels. Average petrol prices fell by 8.3 pence per litre between November and December. Prices also eased for clothing and footwear (6.5% vs 7.5%) and recreation and culture (4.9% vs 5.3%), mainly games, toys and hobbies. On the other hand, prices rose faster for restaurants and hotels (11.3%, the largest since 1991 vs 10.2%), particularly accommodation, and food and non-alcoholic beverages (16.8%, which is the highest since 1977 according to modelled estimates vs 16.4%). Compared to the previous month, the CPI increased 0.4%, the same as in November and also in line with forecasts.

 

Retail sales in the US declined 1.1% month-over-month in December 2022, following an upwardly revised 1% drop in November and worse than forecasts of a 0.8% fall. Sales at gasoline stations recorded the biggest decrease (-4.6%), followed by furniture stores (-2.5%), motor vehicle dealers (-1.2%), electronics and appliances stores (-1.1%), miscellaneous (-1.1%) and nonstore retailers (-1.1%). In contrast, sales were up 0.3% in building materials and garden equipment stores (0.3%) and sporting goods, musical instruments and book sellers (0.1%). Sales at food and beverage stores were flat. Retail sales aren’t adjusted for inflation and part of the decrease in December can be explained by a fall in goods prices during the month and a holiday shopping that was pulled forward into October. However, excluding sales at gasoline stations, sales were down 0.8%, in another sign of a weaker-than-expected holiday shopping and a slowdown in consumer spending amid high inflation and interest rates.

 

Industrial production in the US fell by 0.7% mom in December of 2022, following an upwardly revised 0.6% decrease in November and more than market expectations of a 0.1% loss. It was the biggest drop in industrial activity since September 2021, as higher interest rates and prices weighed on demand. Manufacturing output dropped 1.3%, way more than expectations for a 0.3% decrease. The indexes for durable and nondurable manufacturing dropped 1.1% and 1.5%, respectively, while the index for other manufacturing (publishing and logging) stepped down 0.9%. Meanwhile, mining was down 0.9% while utilities rose 3.9%, driven by increases for both electric and natural gas utilities. Capacity utilization dropped 0.6 percentage point in December to 78.8%, a rate that is 0.8 percentage point below its long-run (1972–2021) average. Considering Q4, industrial production declined 1.7%.

 

Japan’s trade deficit widened to JPY 1,448.5 billion in December 2022 from JPY 603.1 billion in the same month a year earlier and compared with market consensus of a gap of JPY 1,652.8 billion. This was the 17th straight month of a trade shortfall, the longest stretch since 2015, raising concerns over the strength of the country’s economic recovery. Imports climbed 20.6% yoy to JPY 10,235.7 billion, the 20th straight month of double-digit rise; while exports grew at a softer 11.5%, the 22nd straight month of growth but the softest pace since the start of the year, to JPY 8,787.3 billion. Considering the whole year, Japan posted a trade deficit of JPY 19,971.3 billion, the second straight annual shortfall and the biggest since 1979, driven by a surge in imports amid high commodity prices and the slump in yen.

 

Thursday

 

The Producer Price Index in the US dropped 0.5 percent from a month earlier in December 2022, following a revised 0.2 percent gain in November and compared with market expectations of a 0.1 percent fall. It was the largest monthly decline since April 2020, adding to signs that inflationary pressure in the world’s largest economy is cooling. Goods prices were down 1.6 percent, led by a 7.9 percent slump in energy cost and, to a lesser extent, a 1.2 percent fall in food prices. On the other hand, service prices edged 0.1 percent higher, due to increased margins for final-demand trade services. On an unadjusted yearly basis, the PPI increased 6.2 percent in December, the least since March 2021.

 

Friday

 

Retail sales in the UK sank 1% month-over-month in December of 2022, following an upwardly revised 0.5% drop in November and compared to market forecasts of a 0.5% rise. Sales at non-food stores fell 2.1% as consumers are cutting back on spending because of increased prices and affordability concerns. Sales were mostly down for cosmetics, sports equipment, games and toys and watches and jeweller and at department and clothing stores. Also, food sales edged 0.3% lower as customers stocked up early for Christmas. Compared with December 2021, sales declined by 5.8%, the most for that month since records began. Retail sales are now 1.7% below their pre-covid levels. Between 2021 and 2022, retail sales volumes fell by 3.0%, as rising prices and the cost of living affected sales volumes.

 

Prices for US imports rose 0.4 percent from a month earlier in December 2022, following a revised 0.7 percent decrease in the previous month and compared with market consensus of a 0.9 percent fall. It was the first monthly increase in import prices since June on the back of higher nonfuel and fuel prices. Prices for nonfuel imports increased 0.4 percent, the first one-month advance since April, due to rising costs for nonfuel industrial supplies and materials; consumer goods; foods, feeds, and beverages; capital goods; and automotive vehicles. Import fuel prices moved up 0.6 percent, the first monthly increase since June, as higher natural gas prices more than offset lower prices for petroleum. On a yearly basis, US import prices advanced 3.5 percent in December, accelerating from November’s 2.7 percent increase.

 

US export prices fell by 2.6 percent from a month earlier in December of 2022, above expectations of a 0.5 percent drop and following an upwardly revised 0.4 percent retreat in the prior month. It was the sixth consecutive monthly decrease in export prices as nonagricultural export prices fell 2.7 percent, the most since in July 2022 and agricultural export prices decreased 2.4 percent . On a yearly basis, prices for US exports rose by 5 percent, the least since January of 2021 and slowing from the downwardly revised 6.1 percent in the previous month.