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Ahead of tomorrow's CPI, traders are eyeing this morning's Producer Prices for any hints that the disinflation trend will return…or not.

The answer is "not!"

April Producer Prices rose 0.5% MoM (vs +0.3% exp), with March's +0.2% MoM revised down to -0.1% MoM. The downward revision did not stop the YoY read rising to 2.2% (from +2.1% in March)…

Source: Bloomberg

This is the highest YoY read since April 2023 and is the fourth hotter than expected headline PPI print…

Source: Bloomberg

Producer Prices have been aggressively downwardly revised for 4 of the last 7 months…

Source: Bloomberg

Services costs soared, dominating April's PPI gains while Energy was only a secondary impact…

Source: Bloomberg

After last month's farcical 'seasonally adjusted' gasoline price, April saw the PPI Gasoline index rise (with actual prices at the pump) but still has a long way to go…

Source: Bloomberg

Core PPI was worse – rising 0.5% MoM (more than double the +0.2% MoM expected) – which pushed the Core PPI YoY up to +2.4%…

Source: Bloomberg

And finally US PPI Final Demand Less Foods Energy and Trade Services rose by 0.4% MoM and 3.1% YoY (the highest in 12 months).

Worse still the pipeline for primary PPI is not good as intermediate demand is starting to accelerate…

Source: Bloomberg

So, no, The Fed does not have inflation under control.