14 April 2023
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US producer price inflation slows in March

By Daniel Richards

The pace of growth in US PPI for final demand declined sharply in March, down to 2.7% y/y from 4.6% y/y in February. On a month-on-month basis headline PPI fell 0.5% from a 0.1% fall the month prior. This was the largest slowdown in the measure since the start of the Covid-19 pandemic and was driven by falls in gasoline prices. There was also a slowdown in core PPI, which saw growth decline to 3.4% y/y in March, from 4.4% y/y in February.

US initial jobless claims rose by 11K in the week ending April 8, to reach 239K. This was slightly above expectations for a value of 235K and above the previous week’s value of 228K new claims. The latest numbers add to the argument that the US labour market is beginning to show some signs of slowing, at least at the margins.

UK monthly GDP was unchanged in February, slightly below consensus expectations for 0.1% m/m growth. Growth in February is likely to have been hampered by significant public sector industrial action. Although the February figure was materially below the 0.4% m/m growth seen in January it is unlikely that the UK will experience negative GDP growth in Q1 2023. The level of UK GDP is now 0.3% higher than it was in February 2020, just before the start of the Covid-19 pandemic, but the UK recovery nonetheless remains the weakest in the G7.  

Today’s Economic Data and Events

  • 16:30 US retail sales March. Forecast: -0.4% m/m
  • 17:15 US Industrial production March. Forecast 0.2% m/m
  • 18:00 University of Michigan sentiment survey April. Forecast 62

Fixed Income

  • US Treasuries traded in a choppy range with a mid-session pull higher on the back of slower PPI data unwinding later in the day. Yields on the 2yr UST closed higher by about 1bps to 3.9683% while the 10yr UST yield added 5bps to 3.4449%. Moves in European bond markets were largely similar with yields on 10yr bunds up slightly at 2.366% while bund yields were flat at 3.5695%.
  • Fitch raised its rating on Saudi Aramco to ‘A+’ and placed the outlook on stable.


  • The US dollar extended a slump for a third day overnight with the broad DXY index down 0.5%. EURUSD pushed much of the way higher, rising by 0.5% to 1.1046, getting above the 1.10 handle for the first time since April 2022. GBPUSD also pushed higher, up 0.3% at 1.2523 while USDJPY dropped by 0.4% for a second day in a row, settling at 132.58.
  • Commodity currencies popped higher with AUDUSD up 1.4% to 0.6782 as markets were helped along by a general improvement in risk sentiment. NZDUSD added 1.3% to 0.6296 while USDCAD dropped by 0.8% to 1.3337.


  • Equity markets were on the front foot yesterday amidst a bout of risk-on tone more generally, with US PPI figures boosting bets that an end to tightening is in sight. In the US, the NASDAQ had an especially strong day as it added 2.0%, while the Dow Jones gained 0.1% and the S&P 500 1.3%.
  • In Europe, equity markets advanced despite hawkish commentary from ECB members and weak GDP figures from the UK. The CAC added 1.1% and the FTSE 100 and the DAX both closed 0.2% higher.
  • Locally, the DFM dropped 0.3% but the ADX gained 0.1%. The Tadawul added 0.3% and the EGX ended the day 5.6% higher.


  • Oil prices eased back overnight even as there was little in the way of a fundamental catalyst to support the move. Brent futures fell 1.4% to USD 86.09/b while WTI fell by 1.3% to USD 82.16/b. In its monthly oil market report, OPEC pointed to a sizeable deficit emerging in H2 this year following the cuts that several members of the OPEC+ alliance announced earlier in April. Projections from the IEA will be released later today.

Written By

Daniel Richards Senior Economist

Edward Bell Head of Market Economics

Jeanne Walters Senior Economist

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