[Platinum Insights] (7.13.23)

Good morning.

U.S. stock index futures edged higher following a sharp rally on Wall Street in the previous session as data showed inflation was cooling, with investors looking ahead to producer price data due later in the day.

Economists expect producer inflation to have eased to 0.4% over the 12 months through June from 1.1% in the previous month.

PepsiCo Inc raised its annual revenue and profit forecasts for the second time, banking on resilient demand for its snacks and beverages as well as price hikes. Net revenue at PepsiCo’s North America beverages unit, the company’s largest business which houses 7UP and Gatorade, rose 10% in the second quarter benefiting from price hikes. But volumes slipped 4% in the unit, signaling consumers were becoming mindful about spending on sodas.

Shares of Delta Airlines jumped near 4% in premarket trading after reporting record revenue and earnings for the second quarter, thanks to a surge in sales of transatlantic flights.

Big banks including JPMorgan, Wells Fargo and Citigroup are due to report quarterly results tomorrow.

U.S. companies are feeling the heat of decades-high interest rates and sticky inflation, with several of them filing for bankruptcy protection as the era of easy money draws to a close. There were 54 corporate bankruptcy petitions in June, the same as the previous month, with the year-to-date count nearly doubling to 340 from a year ago.

WTI crude futures held its recent advance to around $76 per barrel. Gold held around $1,960 an ounce while the yield on the US 10-year Treasury note fell to the 3.8% level.

Core producer prices in the United States increased by 0.1% over a month in June 2023, matching May’s revised reading and slightly below market estimates of a 0.2% rise. On a yearly basis, core consumer prices advanced by 2.4% in June, slowing from a downwardly revised 2.6% increase in May and below market expectations of a 2.6% rise. 

What does this mean for the consumer? 

When the core Producer Price Index (PPI) goes up 2.4% annually, it means that the prices of goods and services that businesses buy have increased by 2.4%. Overall, a rising core PPI is not good news for consumers. It can lead to higher prices, decreased purchasing power, and increased inflation. 

However, it is important to note that the core PPI is not a direct measure of consumer inflation. The core PPI excludes food and energy prices, which are two of the most volatile components of inflation.

Have a great day!