investingLive Americas FX news wrap 13 May: PPI shocks markets, stocks recover

The S&P and NASDAQ indices close at record levels. The Dow industrial average lags ECBs Lane:Monetary policy decisions will continue to be made on a meeting-by-meeting basis Kevin Warsh confirmed as the Fed Chair Minneapolis Fed Pres. Kashkari: Inflation is too high BOC Meeting Minutes: Sees future rate adjustments would likely be small. US treasury auctions off $25 billion of 30 year bonds at a high yield of 5.046% UK Starmer: Has made clear to allies, he will stand & fight if Streeting triggers contest. More from Fed's Collins:Strong productivity gains should help lessen inflationary pressure Feds Collins:It’s possible the Fed will need to hike rates to cool inflation pressures Crude oil inventories for the current week -4.306M versus -2.051M estimate BOE Mann : Recent geopolitical events have reinforced how exposed the UK economy is US PPI Final Demand for April 1.4% vs 0.5% est. YoY 6.0% vs 4.9% estimate ECBs Kocher: A June hike is not a baseline for the ECB The USD is higher to start the US session. Oil and Bonds are little changed. Stocks higher investingLive European markets wrap: A calmer mood even as US-Iran tensions simmer The April 2026 PPI report came in much hotter than expected and is adding to concerns that inflation pressures are becoming more entrenched. Headline PPI rose 1.4% month-over-month versus 0.5% expected, while the year-over-year rate accelerated to 6.0% from 4.3% previously. Core producer prices excluding food and energy climbed 1.0% on the month — the strongest pace since March 2022 — pushing the annual rate to 5.2%. The inflation pressure was broad-based, with services prices surging 2.5%, while the closely watched PPI ex food, energy, and trade also moved higher to 4.4% year-over-year. Combined with yesterday’s CPI data, the report points to a stronger PCE inflation reading ahead, keeping pressure on the Fed at a time when markets had hoped inflation was stabilizing. Not so fast. Inflation expectations are beginning to edge higher as well, with 5-year expectations rising to 2.7% from a more normal 2.2%. Markets are now pricing in a 59% probability of a Fed rate hike in April, leaving incoming Fed Chair Kevin Warsh facing a difficult backdrop. With inflation moving higher again, rate cuts are no longer part of the near-term discussion, despite continued pressure from President Trump for easier monetary policy. For the Fed, the combination of sticky services inflation, elevated oil prices, and rising inflation expectations increases the risk that inflation remains higher for longer. Treasury yields moved higher after the release, with the 2-year yield moving back above 4.0% and the 10-year yield pushing toward 4.50%.Although yields moved back off those key levels a bit, they still remain elevated. Looking at the yield curve: 2 year yield 3.98%, 10 year yield 4.470% 30 year yield 51035% Those levels are all important proxies, that will be a barometer for rates in the short term. Equity markets soon after the release, reversed early pre-market gains but they reversed again, pushing both the S&P and the Nasdaq to new record closes on the day. The Dow could not keep up with the upside momentum, and closed the day lower. A snapshot of the major indices shows: Dow industrial average -68.01. or -0.14% at 49697.96 S&P index rose 43.29 points or +0.58% at 744-4426 NASDAQ index rose 314.14 points or 1.20% at 26402.34 The US dollar is closing mostly higher but off the highest levels in reaction to yields backing off modestly. Versus the USD, the only currency to move higher vs the USD was the AUD which rose by 0.23% vs the greenback. The others fell: EUR -0.22% JPY -0.16% GBP -0.10% CHF -0.14% CAD _0.07% NZD -0.27%% Fed' Collins spoke today and while she still expressed hope for additional rate cuts later this year, the broader message focused on persistent inflation risks, the possibility of renewed rate hikes, and the need to keep policy restrictive for an extended period. Her concern that inflation may not