#USPPIComesInBelowExpectations


US PPI Fails Expectations; Another Signal of CoolingInflation US June Producer Price Index (PPI) was surprisingly weak as it printed 5.5% y/y compared to consensus estimates of 6.2%. Prior month was revised down to 6%, and MoM was down 0.3%, which was the largest MoM contraction in prices since April 2020. Gasoline prices fell 12% and accounted for close to 2/3rds of the decline in goods prices.

When taken together with the softer CPI yesterday, there's an indication of broader easing in the pipeline for prices.

Key HighlightsHeadline PPI was much stronger than expectations on a y/y basis. The biggest drivers of the cooling was energy prices, especially gasoline prices. These data points would signal cost pressures are cooling at the producer level much more quickly than previously anticipated. Market Implications After softer CPI and nowPPI data, July Fed rate hike odds have fallen to below 15% and odds of September hike are about 45%.

This supports an environment of greater optimism for risk assets over the next few months as this would lessen the probability of aggressive near term tightening by Fed.

Bullish:cooling pipeline prices support the "soft landing" narrative. This would open the door for earlier Fed easing. Increased valuations for both stocks and crypto.

Bearish:Volatile components like gasoline can reverse very quickly, and pressures at the services sector still remain. Neutral:This is one data point and there are still concerns about ending the fight on inflation as recently warned by Fed Chairman Warsh ( zero tolerance, Don'tDeclare Victory Yet)Strategic Takeaway the June PPI print bolsters the disinflation story but will leave the Fed in a data-dependent mode. Markets are celebrating the softer print but a series of similar prints will be necessary to trigger anything beyond market anticipations and get the Fed on track for significant easing.

In the meantime, we are supported by a more risk-friendly backdrop with less near term fears.

#USInflation #PPI #FedPolicy
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Yusfirah
· 2h ago
To The Moon 🌕
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Venüs_
· 3h ago
2026 GOGOGO 👊
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HighAmbition
· 3h ago
good information 👍👍
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