US wholesale prices jumped 1.3% in September, and bond yields fell anyway

America's producer price index, which tracks what businesses charge each other, rose 1.3% in September. Economists expected 0.5%. Over the year, wholesale prices are up 6.3%.

So why did the bond market shrug? Petrol did most of the damage. Wholesale petrol prices rose 20.3% in the month, and energy accounted for about 80% of the rise in goods prices.

Traders read that as an oil shock rather than a broad one. On Wednesday, CME FedWatch put the chance of a Fed rate rise on 28 October above 40%. By Thursday afternoon in New York it was below 30%.

Chart: US wholesale prices jump 1.3%, led by petrol. Monthly change in US producer prices, in %, Jan 2022 to Sep 2026; dots leave out food and energy. Economists expected 0.5% for September. — This story’s chart of the day: the numbers, the dark version and the animated version are on its own page. The chart’s page →

The 10-year Treasury yield fell to 5.09%, from 5.19% on Wednesday. John Williams, president of the New York Fed, said he had no reason for now to think the Fed needs to do more.

Shoppers kept spending. Retail sales rose 0.8% in September against 0.3% expected, though spending at petrol stations jumped 6.4%. Strip out fuel, cars, building materials and restaurant meals, and sales rose just 0.1%.

The short version

the inflation is arriving through the petrol pump, and so is the slowdown. I'd watch that 0.1% more closely than the headline from here, because Americans paying more for fuel have less left for everything else.

This story ran in Wholesale Heat Friday 16 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

More in

All stories →

Wednesday 11 November October's inflation report put a half-point rate rise back on the table
Saturday 7 November America added 165,000 jobs in October, and the bond market heard a December rate rise
Wednesday 4 November The Reserve Bank of Australia raised rates to a level Australians have not seen since 2008

General information and commentary only, not financial advice. It does not take account of your objectives, financial situation or needs, and reflects the author's own reading of public information at the time of writing, which may be wrong. Sharespective, its people and its clients may hold positions in the companies covered. Do your own research and talk to a licensed adviser.