PPI suddenly heats up—is a rate cut in doubt again?

U.S. PPI rose 5.4% year-on-year in August, above market expectations of 5.3%, while the previous reading was also revised from 4.7% to 4.8%; it rose 0.4% month-on-month, in line with expectations. More notably, core PPI rose to 4.6% year-on-year, signaling that inflationary pressure on the production side has clearly returned.
The biggest problem with this data is not the phrase “above expectations,” but that the story of easing inflation is beginning to show complications. Energy costs rose significantly, with diesel prices surging 24.1% month-on-month, suggesting that upstream costs may continue to be passed on to businesses and consumers.
The market has therefore increased its bets on a Federal Reserve rate hike again, pushing Treasury yields higher and supporting the dollar, while growth stocks and high-valuation assets came under short-term pressure. The real highlight ahead is CPI. If the consumer side also shows persistent inflation, the market may need to cool the “rate-cut trade” again. #美国8月PPI录得5.4%高于预期