On May 13, the market got two important, and potentially conflicting, data points regarding inflation. Before the market opened, the April Producer Price Index (PPI) came in hot. This wasn’t totally unexpected due to high energy prices, but the market initially sold off on the news.
However, later in the day, Kevin Warsh was confirmed as the new Federal Reserve chairman. Nobody knows how much influence Warsh will have over interest rates. But Warsh is committed to changing the way the institution operates, which includes looking at data beyond the current “if A, do B” approach.
