Hot Inflation Day 2, Trump-Xi Summit, Nvidia CEO Huang Goes to China 5/13/26

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Carl Quintanilla (1:00)

Market moving insight and analysis. Join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Wednesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Sara Eisen, Mike Santoli here at Post 9 of the New York Stock Exchange. Faber's on assignment, Cramer has the morning off. Got some pressure on pre-market equities as April producer prices come in triple the estimate, one of the biggest monthly spikes in the past 10 years. 10-year yields near four and a half, that's a 10-month high. Oil's relatively steady as the stalemate with Iran will no doubt be the subject of discussion as the president lands in Beijing for the first time in nine years. A road map begins with the president arriving in China for his summit with Xi Jinping. We'll get a live report from Beijing.

Sara Eisen (1:48)

Also ahead, closer look at April's PPI coming in much hotter than expected. Yields spiking, including the 30-year bond yield moving further into the 5 percent area. The chip sector looking to resume its red hot rally after posting its worst day since late April.

Carl Quintanilla (2:04)

Let's begin with market reaction to PPI on top of yesterday's CPI print, which did add to Wall Street's concerns about inflation, guys. Yesterday it was a discussion about super core and services ex-housing today.

Some components with dramatic increases, Mike, I know you had an eye on what airfares did, for example.

Michael Santoli (2:22)

Yeah, airfares like 3 percent month over month. That's part of the driving the core higher.

We have this game of extrapolating what CPI and PPI mean for the PCE index, which is part of the Fed's target, and it might not be quite as dramatic in PCE as we saw here in the PCE, but I mean, the general story is still the same, which is an upturn in all inflation gauges relative to where we were, where the trajectory was going in a couple of months ago. And yields have been responding. I mean, the morning move in treasuries is actually pretty orderly and muted because we've kind of gotten up to the higher end of the range. Two year yields right on the precipice of 4 percent. And then the 30s above 5 and 445 or so for 10 So it's an interesting set up. We have this very, I keep saying high metabolism backdrop because it's high nominal growth, it's massive capex, price and sensitive spending on all of this stuff in the tech food chain. And consumers kind of held in check because of a lot of that. But rates responding and the Fed outlook has to be responding to, Sara.

Sara Eisen (3:31)

The tax that refunds, I think, are helpful when it comes to some of these hotter inflation prints. But no doubt about it. I mean, these are these are big numbers, right? Six percent year over year increase in wholesale inflation, which is, you know, think about it in the factories that will eventually trickle into the consumer. Even the monthly gain was the sharpest since 2022 Even if you take out food and energy and you look at core, if you think core is what the Fed should be looking at, it increased 5.2 percent. From April 2025, biggest advance in more than three years. So that's the year over year number. Services are rising. Prices for transportation and warehousing services.

It's sensitive, right? This is what we mean by when oil prices feed into broader measures of inflation. I think the question is, how sustained will it be and how resilient will the consumer be? And so far so good on the consumer. And then as far as how sustained it'll be, you know, we're watching the action in these longer term inflation expectations measures, you know, the five-year break evens or the ten year. And there's a little bit of movement higher just in the last few days. They had been pretty common in check and behaved, anchored as central bankers would say. But, you know, we're watching it because, you know, this is evidence that it's lasting longer and it's filtering through to other parts of the economy, even places like grocery yesterday, which was a surprisingly high number thanks to, you know, rising beef costs.