PPI Rises, Foreign Demand for US Assets Strong

- The Producer Price Index for June rose .5% versus estimates of a .3% increase and a .2% rise in May.
- The PPI Ex Food & Energy rose .2% versus estimates of a .2% increase and a .3% gain in May.
- Net Foreign Security Purchases for May rose to $69.6B versus estimates of $58.4B and $51.1B in April.

BOTTOM LINE: Prices paid to US producers rose at a faster rate in June on higher costs for food, energy and autos, Bloomberg reported. Prices of raw materials fell 1.7% and prices for computers declined 3.2% last month. So far this year, wholesale prices are rising at an annual rate of 2.1% versus a 3.6% gain in the first part of lat year. I expect producer prices to continue to decelerate over the intermediate-term.

International investors increased purchases of US financial assets in May as holding in the world’s largest economy offered security from sagging emerging markets, Bloomberg said. Purchases of Treasury securities rose a net $13.2 billion versus $3.4 billion in April. Foreign purchases of US equities rose $2.7 billion, while corporate bond purchases increased to $36.5 billion. I expect foreign demand to remain strong and increase over the intermediate-term.