Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

PPI, JOBLESS CLAIMS: RATE CUT THIS YEAR? YEAH, RIGHT

Any market participants still clinging to the fading hope that the Fed will cut interest rates this year found little in Thursday's data to justify those white knuckles.

The prices U.S. companies get for their goods and services at the figurative factory door grew by more than expected in January.

The Labor Department's final demand producer prices index $(PPI)$ USPPFD=ECI rose by 0.4%, a warmer reading than the 0.3% consensus, but a slight cool-down from December's upwardly revised 0.5%.

Year-on-year, PPI held repeated the prior month's restated 3.5% growth, landing well to the north of the 3.2% analysts expected.

Core PPI, which leaves out volatile food, energy and trade services, rose by 0.3% and 3.4% on monthly and annual bases, respectively.

Diving into the data, intermediate demand - which tracks business-to-business prices - showed a fairly stark 5.5% monthly jump in unprocessed goods. That suggests surging input costs, which are likely to be passed along, at least in part, to the consumer.

"Prices for inputs in early-stage intermediate demand grew at the fastest pace since 2023, meaning companies are seeing raw inputs rise across goods and services," writes Scott Helfstein, head of investment strategy at Global X. "The Fed is likely going to pay attention and be cautious to see how that passes through to consumer expectations."

It's the third hotter-than-expected January inflation marker released in just the last week, and would appear to justify Powell & Co's indefinite rate cut pause.

"Thursday's stronger-than-expected PPI helps to confirm, especially after Wednesday's hot CPI, that inflation did indeed come roaring back in January," says Paul Stanley, chief investment officer at Granite Bay Wealth Management.

"(It) makes the Federal Reserve's path much clearer, since there is arguably zero reason to cut interest rates right now."

Still, the glass-half-full crowd would point out that due to upward revisions to December data, it's the first sign that price growth slowed down last month.

Changing gears, a separate report from the Labor Department showed 213,000 U.S. workers joined the line outside the unemployment office last week USJOB=ECI, 3.2% fewer than the previous week and slightly below the 215,000 analyst estimate.

The underlying trend, as expressed by the four-week moving average of initial claims, is essentially sideways with a slight downward bias.

Recent layoff announcements, from JPMorgan, Chevron, Boeing and others, suggests that initial claims are set to start climbing. But for now, the labor market looks healthy.

"Fed policy is aimed at supporting the economy and the job market before a recession shapes up," says Carl Weinberg, chief economist at High Frequency Economics. "Fed Chair Powell says that the U.S. economy is in 'great shape' and is the envy of advanced economies around the world."

"These low claims figures support that assessment."

Ongoing claims USJOBN=ECI, reported on a one-week delay, decreased by 1.9% to 1.85 million, also slightly south of consensus.

(Stephen Culp)

*****

FOR THURSDAY'S EARLIER LIVE MARKETS' POSTS:

WALL STREET RISES WITH EARNINGS HELP EVEN AS INFLATION STICKS - CLICK HERE

U.S. STOCK FUTURES HIGHER, YIELDS LOWER, DESPITE HOT PPI - CLICK HERE

EUROPEAN DEFENCE: "THIS IS JUST THE START OF A SUPER-CYCLE" - CLICK HERE

THREE REASONS WHY EUROPEAN NATURAL GAS PRICES CAN FALL - CLICK HERE

HERE'S WHY THE ECB SHOULDN’T FOLLOW A HAWKISH FED - CLICK HERE

ANOTHER DAY, ANOTHER STOXX RECORD - CLICK HERE

EUROPE BEFORE THE BELL - UKRAINE PEACE TALKS TOP OF MIND - CLICK HERE

MORNING BID UKRAINE TALKS ABSORB US INFLATION SHOCK - CLICK HERE