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INSTANT VIEW: Producer prices fall, jobless claims rise

NEW YORK (Reuters) - Producer prices fell for a fifth straight month in December, partly on a record drop in gasoline prices, government data showed on Thursday, indicating that inflation pressures were likely to stay muted for a while.

The number of workers filing new claims for unemployment benefits rebounded last week after a brief holiday-induced slowdown, government data showed on Thursday, suggesting that the year-long recession was deepening.

COMMENTS:

JANE CARON, CHIEF ECONOMIC STRATEGIST, DWIGHT ASSET MANAGEMENT, BURLINGTON, VERMONT:

“All the data released this morning were uniformly bearish for Treasuries and bullish for riskier asset classes. They were bad, but not as bad as expected.”

DAVE LUTZ, MANAGING DIRECTOR, STIFEL NICOLAUS, BALTIMORE:

“It’s (claims) pretty benign, especially since we’re past the Christmas holiday. A lot of people were reluctant to lay people off during the holiday season.

“The revision wasn’t too bad, only increased by 3,000 jobs, obviously it’s a big number but it wasn’t significant. Also, the continuing claims number came out significantly lower than expected.

“For the most part the economic data that came out today is pretty benign and it’s going to be a non-event behind some other macro stories as far as Bank of America approaching the government again, as far as Steve Jobs and what’s going on at Apple.”

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:

“The U.S. (numbers) are slightly dollar-positive (because) it’s not all worse than expected. Minor improvements in the New York Fed Empire index and a drop in continuing claims are the bright spots, but initial claims are still higher, with non-seasonally adjusted claims up. So there is still more erosion in the labor market. A number of seasonal and holiday related issues are still affecting the data.”

KURT KARL, CHIEF U.S. ECONOMIST, SWISS RE, NEW YORK:

PPI: “Year-over-year is now deflationary. That’s what I expect for CPI tomorrow. There’s a major drop off the cliff in inflation with big drops in food and energy.

“We are heading into deflationary environment in 2009. It’s the inversion of the energy and food price increases last year. I don’t think we’ll be back to inflation until 2010 so that’s not a major worry.

JOBLESS CLAIMS: “Last week’s report was due to a shortened holiday week. This week, we have the catch-up from last week. The 500,000 figure is still terrible.”

“The good news is four-week is edging down. With the bigger stimulus package and monetary stimulus, financial markets are doing better in some sense. Companies will become more cautious in layoffs in the coming months.”

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

“Core PPI was slightly firmer than expected. It seems that we have gains in auto prices, but it is a volatile sector so I would not get too excited about the slightly firmer than expected core rate. The headline was as expected. The jobless claims rose from the previous week so they do suggest the previous two weeks were distorted by the holidays. They were higher than expected but they are not back at the highs of early December. It suggests January payrolls will be another weak number.”

CRAIG PECKHAM, EQUITY TRADING STRATEGIST, JEFFERIES & COMPANY, NEW YORK:

“The first thought when you look at the (claims) numbers is that it’s obviously an uptick, but I don’t think the data points to an acceleration in the rate of job decline. If there’s any silver lining, it’s that while the employment situation is sluggish, nothing points to intensification.

“For PPI, I guess what we were a bit surprised about is that on a core basis, pricing was a little higher than the market expected. I don’t think anyone is worried about upside pressure. This levels seems consistent with an economy that isn’t collapsing because of pricing pressure, and on a counterintuitive sense, this could be positive.

“I think that company-specific issues, like JPMorgan or now what we’re learning about the Bank of America, is going to trump economic data today.”

MARKET REACTION: STOCKS: U.S. equity index futures hold losses. BONDS: U.S. Treasury debt prices erased gains. DOLLAR: U.S. dollar holds gains.

OTHER DATA FROM JAN 15:

NY Fed manufacturing rout eases but still dire

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