#USPPIComesInBelowExpectations


US PPI Comes In Below Expectations And Lifts Risk Mood

US PPI just printed soft and that soft print adds to CPI cool down that came day before. Market got a clear sign that price pressure at factory gate is easing even with war noise in Gulf.

News now: June PPI fell 0.3 percent from May while guess was flat or up 0.2 percent. Core PPI that strips food and energy rose only 0.2 percent versus 0.3 percent guess. Year on year PPI eased to 5.5 percent from 6.0 percent in May. Another read for July showed PPI down 0.5 percent versus up 0.2 percent guess with headline year on year at 9.8 percent versus 10.4 percent guess. Through July, PPI up 2.2 percent versus 2.7 percent in June. Core PPI rose 4.7 percent versus 5.1 percent guess. Goods price drop of 1.4 percent led fall, best drop since July 2022.

Why this matters: PPI leads CPI. When factory gate price falls, retail price often follows with lag. Soft PPI plus soft CPI that printed day before tells Fed that inflation trend is cooling even if oil and war risk stay.

Market effect: Soft PPI lifted stocks and eased yields. Treasury yields fell after print. Dollar eased. Tech and growth got bid. For crypto, lower yield and softer dollar often lift BTC and ETH. Yesterday BTC held firm and ETH held above 1900 after PPI news. Funding stayed flat which shows spot led move.

Logical view: Fed watches both CPI and PPI plus trimmed mean. PPI below guess does not mean Fed will cut now but it trims odds of more hikes and keeps cut talk alive later this year. Fed has three more meets this year after July. If PPI stays soft and core stays near 2.6 percent year on year, Fed may keep hold and talk dovish tilt.

Real idea: Even with soft PPI, Fed still sees both CPI and PPI above 2 percent goal. War risk in Hormuz can still push oil and ship cost up. So path is not straight down. Expect chop. Yet trend is down from peak.

What to watch next: Retail sales, job data, next CPI and PPI, oil and Hormuz flow, Fed talk on AI price lift.

Bottom line: US PPI below guess gives risk a boost. It shows factory gate inflation is cooling. If trend holds, it supports risk assets including crypto and keeps rate hike fear low.
BTC-0.47%
ETH-0.09%
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