Inflation Scorecard: Goods Prices Flat to Lower

Retail prices, as reported by the U.S. Bureau of Labor Statistics' Consumer Price Index, were unchanged in February, bringing the yearlong increase for the index down to 2.1 percent. Wholesale prices reflected in the Producer Price Index for Finished Goods fell 0.6 percent last month, dropping the year-over-year inflation rate to 4.4 percent.

Other inflation markers for the week ending Thursday:

• The London morning gold fix ended 1.5 percent higher, though average prices fell to $1,118; spot COMEX settlements averaged $1,116, ending at a 2.2 percent higher price; average daily COMEX volume fell to 170,100 contracts; open interest rose 0.7 percent to an average 504,200 contracts.
• Three-month London gold lease rates held steady after a basis point (0.1 percent) increase in forward rates and Libor neutralized each other.
• COMEX gold stocks rose by 23,800 ounces and now total 10.02 million ounces, enough to cover 19.7 percent of open interest.
• Gold stocks, along with equities in general, rose, though at disparate rates. The 2.8 percent return of the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) doubled the 1.4 percent appreciation in the Market Vectors Gold Miners ETF (NYSE: GDX), a proxy for major gold producers; the S&P 500 Composite also rose 1.4 percent; the correlation of GDX to the blue chip benchmark softened to 62 percent.
• Nearby NYMEX crude oil inched up 0.1 percent, though the average price fell to $81.57; the gold/oil multiple ticked up to 13.7x.
• Rates on three-month Treasury bills and Libor rose a basis point, keeping the average TED spread at 11 basis points; the spread represents the return sought by financial institutions for interbank loans.
• One-year finance costs embedded in COMEX gold futures rose a couple of basis points, but held the 10-point premium over Treasurys seen last week.
• Long Treasury bond yields fell 7 basis points to 4.59 percent, flattening the yield curve to 444 points.
• The U.S. dollar tumbled 1.1 percent against the euro; cross rates in interbank dealings averaged $1.3725.
• Year-over-year monetary inflation eased from last week's 2.4 percent rate; the real return on three-month Treasury bills ended at negative 185 basis points; long-term monetary inflation now averages 4 percent per annum.

Real Return On Three-Month T-Bill