PPI came in softer than expected across the board — headline flat at 0.0% MoM vs 0.2% est, core at 0.2% vs 0.3% est. YoY headline also missed at 4.7% vs 4.9%, though core ticked slightly hotter at 4.2% vs 4.1%.
This is a disinflationary print where it matters most for the Fed's near-term calculus. Softer producer prices mean less upstream pressure on consumer inflation, which keeps the door open for rate cuts if labor or growth data weakens further.
Market's probably pricing in a higher probability of a June cut now. Watch how $TLT and rate-sensitive sectors like utilities and REITs react. If bonds rally and yields drop, that's your signal that the market believes the Fed has more room to ease.
Still, core PPI YoY came in a touch hot — so this isn't a slam dunk dovish narrative. But it's enough to keep the soft-landing thesis alive and prevent the Fed from sounding hawkish at the next presser.
This is a disinflationary print where it matters most for the Fed's near-term calculus. Softer producer prices mean less upstream pressure on consumer inflation, which keeps the door open for rate cuts if labor or growth data weakens further.
Market's probably pricing in a higher probability of a June cut now. Watch how $TLT and rate-sensitive sectors like utilities and REITs react. If bonds rally and yields drop, that's your signal that the market believes the Fed has more room to ease.
Still, core PPI YoY came in a touch hot — so this isn't a slam dunk dovish narrative. But it's enough to keep the soft-landing thesis alive and prevent the Fed from sounding hawkish at the next presser.