The stock market is showing a mixed picture. The S&P 500 rose 0.37% to 7,572, the Dow increased 0.29% to 52,658, while the Nasdaq 100 fell 0.28% to 29,502. The VIX also dropped to 15.7, approaching one of its calmest levels in recent times. This divergence becomes more meaningful when considered alongside the fact that the Russell 2000, a small-cap index, reacted most strongly on the same day, once again demonstrating that the interest rate-sensitive segment is the quickest to react to data surprises.

The stock market is showing a mixed picture. The S&P 500 rose 0.37% to 7,572, the Dow increased 0.29% to 52,658, while the Nasdaq 100 fell 0.28% to 29,502. The VIX also dropped to 15.7, approaching one of its calmest levels in recent times. This divergence becomes more meaningful when considered alongside the fact that the Russell 2000, a small-cap index, reacted most strongly on the same day, once again demonstrating that the interest rate-sensitive segment is the quickest to react to data surprises.

On the bond side, the 2-year yield fell to 4.15%, the 10-year yield to 4.56%, while the 30-year yield rose slightly to 5.09%. The dollar index also fell to 100.51. The main trigger behind these movements is the June Producer Price Index data released today. The figure fell significantly below expectations, declining 0.3% month-on-month, the first drop since August 2025, and falling 5.5% year-on-year from the previous month's (downward revised) level of 6.0%. Core PPI also unexpectedly softened, falling 4.7% year-on-year, compared to expectations of a rise to 5.2%. Much of the decline came from energy prices, with gasoline prices falling 12%, accounting for two-thirds of the overall drop in commodity prices.

This data, when read alongside the June CPI data released the previous day, paints an even stronger picture; CPI also fell 0.4% month-on-month, the largest monthly drop since April 2020, bringing annual inflation down to 3.5%. With both sets of data being cold, the market priced in an 87.7% probability that the Fed will keep interest rates unchanged at its July FOMC meeting.

Gold and silver present a different picture. Gold is trading sideways around $4,056, while silver has fallen 1.67% to $57.56, consistent with the large unwind in silver ETFs we discussed earlier. Bitcoin, meanwhile, is trading calmly around $64,886, showing a slight decline and consolidating in the mid-$60,000 range after a partial recovery from its lows at the end of June.

For those following the market through Gate, the key point is that these two consecutive cold inflation data points have largely removed the possibility of a near-term Fed rate hike from the table, creating an environment where the disinflation theme is supporting risk assets in the short term. However, the sustainability of this picture will be tested by tomorrow's retail sales data and Monday's leading economic indicators index, particularly whether energy price pressure in the Middle East will reverse this decline in the coming months.

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