Inflation Unleashed?

Includes: IEF, LQD, SHY, TIP, TLT
by: SA Editors

The Labor Department today announced that the producer price index [PPI] leapt by 2% in November, the highest rate since November 1974. The core PPI, which excludes food and energy, rose 1.3%, the highest rates since July 1980. That followed a drop of 1.6% in October, when the core PPI also fell 0.9%. Economist had expected the PPI to rise by only 0.5% and the core PPI by 0.2%, according to a Bloomberg survey. Noteworthy components: raw materials up 15.7% month-over-month, gasoline up 17.9%, natural gas up 5.9%. Meanwhile, the Consumer Price Index [CPI] was flat for November, as was the core CPI, which excludes food and energy.

• Sources: Labor Department PPI Press Release, Labor Department CPI Summary, WSJ, Bloomberg, AP.
• Related commentary: PPI Jumps Fully 2% - A Closer Look, Fed Leaves Short-Term Rates at 5.25%, Dollar Glut: Why the Bears Are Wrong, 'Goldilocks' Scenario in Danger.
• Potentially impacted stocks and ETFs: iShares Lehman 1-3 Year Treasury Bond ETF • iShares Lehman 7-10 Year Treasury ETF • iShares Lehman 20+ Year Treasury Bond ETF • iShares Lehman TIPS Bond ETF, iShares GS $ InvesTop Corp Bond ETF.

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