Don't Expect A Fed Interest Rate Hike In DecemberDon't Expect A Fed Interest Rate Hike In December

Opening

The Fed will have its hands full at the next FOMC meeting on December 14th. I for one do not envy them. Why? The latest round of economic data came in this morning in the form of the Producer Price Index and Industrial Production, and neither looked good. The expectation for PPI had been for 0.3%, and we got a reading of 0%. Meanwhile, IP came in at 0% vs. an expectation of 0.1%.

One of my favorite charts to observe is the one above, the PPI y-o-y change. PPI has clearly been in a down trend since the middle of 2009 with no end in sight.

It looks even worse when you index the chart. You can see the massive run-up in prices after 1970. It would seem we are headed lower back to the red trendline.

(click to enlarge)

The chart