$BTC Inflation-leading indicators cool off
US August PPI comes in below expectations
Rate-cut expectations start heating up in the market
In the past two days, US inflation
has given the market another mix of half-good, half-bad data
August PPI rises 0.4% month over month
—exactly in line with market expectations
Year over year, it rises 5.4%
—actually a touch higher than the expected 5.3%
So strictly speaking,
we can’t say the PPI is “below expectations”
In simple terms,
PPI reflects the costs businesses pay for upstream inputs and the prices they get at the factory gate.
When upstream price pressures ease,
the inflation pressure that later filters through to consumers’ spending will also lessen
This time, core PPI missed expectations
which suggests that
besides energy,
price-raising momentum from the business side is slowing
and there are signs inflation is cooling
The market immediately started to trade on this
As inflation pressures ease,
the Fed will likely have even more confidence to cut rates
But right now, the key factor is the oil price
In August, energy prices rose 4.2%
with diesel prices surging even more—up 24.1%
That conflict in the Middle East
has already started to make its way from the headlines
into US companies’ cost spreadsheets
So now, US inflation is a bit like this:
Core inflation wants to come down,
but the oil price keeps coming out to cause trouble 😂
That’s also why the market is still deeply divided right now
over whether the Fed’s next step is to hike rates
or keep interest rates unchanged
And don’t forget,
tomorrow there’s the US August CPI
PPI is just the appetizer—
CPI is the real main course
If CPI also clearly cools,
the market may start trading rate cuts/easing again
But if CPI continues to be pulled upward by oil prices…
then it gets complicated
US Treasury yields, the dollar, BTC, and US stocks
may have to ride another roller coaster together
And if CPI is also lifted by oil prices,
then the Big Pie will still have to fall
straight toward 76,000
For now, all eyes are on tomorrow’s CPI
which matters far more than today’s PPI
#usaugustppiriseslessthanexpected