The U.S. Producer Price Index for July rose 0.9% month‑over‑month and 3.3% year‑over‑year, well above forecasts, sparking concerns that tariff‑driven cost pressures may linger.
Key moves
- PPI MoM 0.9% vs 0.2% expected; core 0.9% vs 0.2% expected; Yo3.3% vs 2.5% expected; ex‑food & energy 3.7% vs 2.9% expected.
- Major U.S. equity indices were flat, ending the session unchanged at +0.03%.
- Treasury yields climbed across the curve: 2‑yr 3.734% (+4.7 bps), 5‑yr 3.817% (+4.5), 10‑yr 4.286% (+4.7), 30‑yr 4.875% (+4.6).
- The dollar strengthened against the AUD (+0.73%) and NZD (+0.97%) and gained 0.49% vs EUR, 0.25% vs JPY, 0.35% vs GBP, 0.27% vs CHF, 0.39% vs CAD.
- Fed market expectations shifted: 94% chance of a 25‑bp cut in September, 6% chance of no change, and 6% chance of a 50‑bp cut removed.
- Crude oil futures closed at $63.96, up $1.21; gold fell 0.63% to $1,771; Bitcoin dropped 4.4% to $117,932.
- Fed officials highlighted that inflation sits about 1% above target, the labor market remains near full employment, and tariff impacts may fade in 6–9 months.
Summary
Strong PPI readings and rising yields have muted equity markets while bolstering the dollar, and Fed policy expectations have tightened, leaving room for a potential rate cut later in the year.
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