The October Producer Price Index is due at 8:30 a.m. Eastern Time on Friday, with economists expecting a rise of 0.4 percent from September and 6.6 percent from a year earlier, according to CNBC. The data follows a hotter than expected October consumer price report, and traders fully price a quarter point Federal Reserve rate hike next month.
Why it matters
The core reading matters as much as the headline. Economists polled by Dow Jones expect core producer prices, which exclude volatile food and energy costs, to rise 0.3 percent on the month and 5.0 percent on the year, compared with 0.7 percent and 5.0 percent in September. A core reading above 0.3 percent would push yields and the dollar higher and the Nasdaq lower.
The market has already made up its mind about December. Rate futures price an 87.4 percent chance of a 25 basis point hike and a 12.6 percent chance of a 50 basis point hike at the December 8 and 9 meeting, and swaps traders price at least a quarter point hike with a strong likelihood of another in January. The 10 year Treasury yield sits at 5.127 percent, and the two year note is on track for its worst week since 2024.
What happens next
Federal Reserve officials have been blunt about the direction. New York Fed President John Williams said inflation is far too high and the Fed still has work to do, and Cleveland Fed President Beth Hammack said inflation is heading in the wrong direction and higher interest rates are needed to bring it under control.
For now, the market is positioned for a hike and waiting on the data to confirm the size. If producer prices come in hot, the case for a bigger move strengthens. If they cool, the Fed has room to move more slowly. Friday morning will decide which way the argument goes, and the technology stocks trying to steady after the Nvidia shock will feel the answer first.
The October consumer price report set the tone for the week. Prices rose 0.4 percent in the month against forecasts of 0.3 percent, food prices rose 0.5 percent after being unchanged in September, energy rose 0.7 percent and gasoline rose 1.0 percent. The Labor Department could not publish a year over year figure because there was no October 2025 report during the government shutdown.
