Morning Brief: Producer prices and retail sales test the energy shock

Thursday brings the second half of this week's inflation read. After Wednesday's September CPI, the Bureau of Labor Statistics publishes the September Producer Price Index at 8:30 a.m. ET. The August report showed final demand prices up 0.4% for the month and 5.4% from a year earlier on an unadjusted basis, so the question is how much of the oil-driven cost surge is still moving down the pipeline toward consumers.

Consumers under a fuel bill

At the same hour, the Census Bureau releases advance September retail and food services sales. The backdrop is a heavy energy bill: EIA's weekly survey put U.S. regular gasoline at $4.331 a gallon in the week of October 12, up $1.270 from a year earlier, and on-highway diesel at $6.179, up $2.514. The Fed's October Beige Book, released Wednesday, said most Districts reported little or no change in overall consumer spending, with more than half noting that spending was driven by higher-income households. A strong nominal retail number partly inflated by gasoline station receipts would not contradict that picture.

Energy data, delayed

Monday's federal holiday has pushed EIA's Weekly Petroleum Status Report to today, with the agency listing a 12:00 p.m. ET release time. The natural gas storage report is on its regular Thursday 10:30 a.m. slot.

Rates and funding

Treasury auctions 4-week and 8-week bills today, and its tentative schedule shows the 20-year bond reopening and a new 5-year TIPS being announced today for auctions on October 21 and 22. Per the Fed's H.15, the 10-year yield was 5.21% on October 13 and the 30-year 5.56%, so next week's long-end supply arrives with long yields above 5%. Freddie Mac publishes its weekly mortgage survey at noon; last week the 30-year fixed averaged 7.40%.

Earnings

Marsh opened the day with Q3 revenue of $6.863 billion, up from $6.351 billion, and adjusted EPS up 10% to $2.03, with Consulting growing faster than insurance broking. Alcoa reports after the close. On the Fed calendar, Chairman Warsh is listed for a fireside chat with IMF Managing Director Kristalina Georgieva in Bangkok.