While we wait for the Fed’s final decision on rates this morning (announcement at 11:15 Pacific time), we can chew on the Producer Price Index (PPI) report that preceded it.

This is a good example for anyone confused by these numbers.  The “headline” PPI figure showed a drop of 1.2% vs. the expected drop of 0.3%.  That seems like a good thing. right?.  Lower inflation means the Fed can relax about the whole inflation thing.  Not exactly.

The “core” PPI rate actually shows an increase of 0.2% which exceeded the 0.1% forecast increase, suggesting the opposite.  The inflation issue is still on the table and so bonds are down in price, rates rising this morning.

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