#USPPIComesInBelowExpectations

*#USPPIComesInBelowExpectations*

Wholesale inflation just cooled more than anyone expected — and markets are taking notice.

The US Producer Price Index fell 0.3% MoM in June, reversing May’s 0.6% gain and coming in below the 0.0% forecast. On an annual basis, PPI slowed to 5.5% from 6.0%, also missing estimates of 6.2%.

Core PPI, which strips out food and energy, rose just 0.2% MoM vs 0.4% expected. The annual core rate edged up to 4.7% from 4.6%, but still landed below the 5.2% consensus.

What’s driving it? Lower energy costs. Wholesale energy dropped 6.4% MoM, with diesel down 18%, and goods prices fell 1.4% overall. That’s the largest monthly decline in producer prices in 14 months.

The impact was immediate. Stock futures climbed, Treasury yields eased, and Fed rate-hike odds for July dropped to ∼10%. CME FedWatch now shows only a 52% chance of a September hike, down from 88% earlier.

Caveat: Fed Chair Kevin Warsh called the data “an imperfect gauge” and said inflation still looks “less good”. With oil rebounding on Middle East tensions, this relief could be temporary.

For now though, softer PPI + softer CPI = breathing room for risk assets.
#FederalReserve #InflationData #PPI #MarketNews cbc80007e7f0ee7747fc7135ef8f