Tonight’s U.S. PPI came in lower than expected.

In June, PPI fell 0.3% month-over-month, while the market had expected it to be flat; core PPI rose 0.2% month-over-month, also slightly below the expected 0.3%.

Looking at these numbers alone, the Federal Reserve doesn’t need to rush into raising interest rates, and the market has a reason to breathe a little easier.

But don’t rush to say inflation is already fine.

This time, the drop in PPI is largely being helped by energy prices. In June, final demand energy prices fell 6.4% month-over-month, with gasoline down even more—by 12%; service prices, meanwhile, were still up 0.2%.

The issue is the timing lag.

The report is about June, but after entering July, tensions between Iran and the U.S. escalated again, and risks to Hormuz shipping have also resurfaced. Cheaper energy in June doesn’t necessarily mean costs will keep moving downward going forward.

So I’m not rushing to draw the conclusion that inflation is over. Instead of focusing on this month’s nice-looking numbers, I want to see whether July’s energy and transportation costs rebound, and whether core services prices can truly slow down.

In short, the data tonight is indeed good news, but its shelf life may not be as long as it seems.

#Today’s Key News

1｜China’s second-quarter economy continues to slow

China’s Q2 GDP grew 4.3% year-over-year, down from 5.0% in Q1. June industrial output grew 5.3%, but retail only grew 1.0%; fixed-asset investment for the first half fell 5.7%. Production is still holding up, but consumption and investment are clearly weaker.

2｜ASML again raises its outlook for the year

ASML’s Q2 net sales were €9.3 billion, its gross margin was 54.0%, and it raised its full-year net revenue guidance to €43 billion to €45 billion. The company also plans to expand capacity over the next two years, reflecting continued strong demand for advanced chip-making equipment.

3｜Hormuz risk rises again

The U.S. military has restarted a maritime blockade on Iranian ports and expanded airstrikes targeting Iranian locations. When AP reported on July 15, Brent crude was trading above $85 per barrel. Energy and shipping costs remain the most direct areas to watch going forward.

4｜Fed Chair stays tough on inflation

Fed Chair Kevin Warsh submitted his semiannual monetary policy testimony to the Senate, reiterating a “zero tolerance” stance toward persistently high inflation. He confirmed that the June meeting kept interest rates at 3.5% to 3.75%, but he did not provide a clear direction for the next steps in the written testimony.

5｜Goldman Sachs posts strong second-quarter earnings

Goldman Sachs’ Q2 net revenues were $20.34 billion, net income was $6.63 billion, and earnings per share were $20.98, with an annualized return on shareholders’ equity of 23.5%. At least among large investment banks, trading and corporate finance activity still have support.

Source: U.S. Bureau of Labor Statistics, China National Bureau of Statistics, ASML, Federal Reserve, Goldman Sachs, AP. Data cutoff: 2026-07-15 23:16 (Singapore time).