U.S. October PPI annual rate hits a four-year high, further strengthening expectations of Fed rate hikes.

November 13 - U.S. producer prices rose further in October, posting the largest annual gain in four years, supporting market expectations that the Federal Reserve may continue to raise interest rates after the widely anticipated rate hike next month. The Labor Department's Bureau of Labor Statistics said on Friday that the U.S. October PPI rose 0.3% month-over-month, below the expected 0.4%, with the previous value revised up to 1.4%. Last month, producer prices were boosted by a 0.5% increase in goods prices, mainly food and basic organic chemicals. Service prices rose 0.2%, marking the fifth consecutive month of increase. October PPI surged 6.5% year-over-year, the largest annual gain since November 2022, following a 6.3% rise in September.

This report follows the release of October CPI data this week, which exceeded expectations. In addition, last week's October nonfarm payrolls surge and the unemployment rate falling from 4.2% in September to 4.1%, combined with comments from Fed Governor Waller, have left financial markets oscillating between "pricing in a 25 basis point rate hike in December" and "leaving room for a 50 basis point hike."