LIVE MARKETS-'Greedflation' is back as US corporate prices jump

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

'GREEDFLATION' IS BACK AS US CORPORATE PRICES JUMP

US companies are raising prices even though their costs aren't going up. That's a sign "greedflation" has returned and could push the Federal Reserve to tighten harder than markets expect, according to Societe Generale strategist Albert Edwards.

The value-added output price deflator for non-financial corporations rose 4.3% year-on-year in the second quarter, more than double the roughly 2% pace of the previous two years, Labor Department data showed.

"There are no cost pressures to justify this jump," Edwards said, noting that slower growth in unit labor costs is fully offsetting higher costs elsewhere, including oil.

The gauge gets less attention than consumer prices or the PCE index, but it tracks, and can lead, core inflation. If the pickup spreads to those measures, the Fed would likely have to speed up what is expected to be one of the shallowest tightening cycles in history, he said.

Oil is adding to the pressure. Spot crude is trading more than $30 a barrel above the nearest futures contract, a record, and companies appear to be passing that straight on to customers. Refining margins are also at all-time highs.

Higher rates, meanwhile, may do less than usual to slow the economy because companies' net interest payments are still low. That means that the Fed would have to raise rates further than it would otherwise to get the same effect.

(Karen Brettell)

EARLIER ON LIVE MARKETS:

BOFA CLIENTS SELL INTO STRENGTH CLICK HERE

DATA TORNADO: PCE, GDP, ADP, ET AL CLICK HERE

SOFTER PCE HELPS LIFT US STOCKS, BUT SECTOR LEADERSHIP REMAINS MIXED CLICK HERE

TD COWEN SAYS AI PROMISES HOSPITALS A MARGIN CURE CLICK HERE

COOLER-THAN-EXPECTED PCE ADDS SOME STEAM TO US STOCK FUTURES CLICK HERE

A BULLISH INFLECTION POINT FOR UK ASSETS? CLICK HERE

WHAT TO THINK ABOUT IN Q4 CLICK HERE

STOCKS POISED FOR NEXT LEG HIGHER... IF OIL DROPS CLICK HERE

STOXX SET FOR MONTHLY FALL, BUT A STEADY QUARTER CLICK HERE

BEFORE THE BELL: SET TO END THE MONTH ON A HIGH NOTE CLICK HERE

A CRUEL QUARTER FOR BONDS CLICK HERE