Thursday’s two sets of data are worth noting.
In July, the PPI was flat month over month, below the expected 0.2%. Year over year it came in at 4.7%, also below the expected 4.9%, down sharply from June’s 5.5%. Energy was a clear drag: month over month -3.1%, with gasoline down 5.7%. Combined with the CPI data from the previous day, inflation pressure is indeed easing, and the need for a September rate hike is further reduced. This is the classic pairing of “demand cooling + supply chain easing”—something every seasoned cycle veteran has seen.
As for employment data: initial jobless claims rose to 209,000, above the 204,000 expected. Continuing claims, however, fell by 22,000 to 1.777 million. The four-week moving average remains at 199,000. The labor market is cooling, but there are no signs of a crash. This “soft-landing” cadence is exactly what the Fed wants—suppress inflation without triggering a hard landing.
Historical experience: with this kind of data combination, markets often price in “a pause in rate hikes” or “an earlier turn.” But don’t forget that the true turning point usually requires the unemployment rate to rise clearly for several consecutive months, or for problems to emerge in credit markets. It’s still too early. Stay clear-headed and don’t let short-term data steer you off course.
In July, the PPI was flat month over month, below the expected 0.2%. Year over year it came in at 4.7%, also below the expected 4.9%, down sharply from June’s 5.5%. Energy was a clear drag: month over month -3.1%, with gasoline down 5.7%. Combined with the CPI data from the previous day, inflation pressure is indeed easing, and the need for a September rate hike is further reduced. This is the classic pairing of “demand cooling + supply chain easing”—something every seasoned cycle veteran has seen.
As for employment data: initial jobless claims rose to 209,000, above the 204,000 expected. Continuing claims, however, fell by 22,000 to 1.777 million. The four-week moving average remains at 199,000. The labor market is cooling, but there are no signs of a crash. This “soft-landing” cadence is exactly what the Fed wants—suppress inflation without triggering a hard landing.
Historical experience: with this kind of data combination, markets often price in “a pause in rate hikes” or “an earlier turn.” But don’t forget that the true turning point usually requires the unemployment rate to rise clearly for several consecutive months, or for problems to emerge in credit markets. It’s still too early. Stay clear-headed and don’t let short-term data steer you off course.