CPI threw cold water on things just last night, and today’s September U.S. PPI report flipped the table. September CPI had just come in above expectations the day before, at **3.7%** year over year (versus expectations of **3.6%**); now producer prices have delivered another heavy blow, bringing an “CPI + PPI double whammy” for inflation.

**📊 Upstream costs are flashing red across the board**

September PPI surged to **6.3%** year over year (versus expectations of around **5.3%**, with the previous reading revised up to **5.6%**), its highest level since May 2026; month over month, it rose **1.3%** (versus expectations of around **0.6%**), the biggest monthly increase since March 2022—as upstream price hikes accelerate their pass-through to downstream sectors.

Energy prices rose **10.8%** in a single month, pushing goods prices up **2.6%** and making energy the biggest driver of this latest rise in prices. More troubling is core PPI: up **0.7%** month over month (versus expectations of **0.3%**) and **5.0%** year over year (versus expectations of **4.4%**), showing that inflation is far stickier than the script suggested.

September retail sales rose **0.8%** month over month (vs. **0.3%** expected)—consumer spending hasn’t flinched. That means shoppers are absorbing businesses’ price hikes, giving them more confidence to raise prices. This fire of inflation won’t be put out anytime soon.

**💡 Rate hikes are back on the table—how is the market pricing them in?**

CME data shows the market is pricing in about a **30%** chance of a Fed rate hike this month, up from just **17%** a week ago—big money has already started hedging against a hike. But the 10-year Treasury yield has retreated to around **5.1%** from its post-CPI high of **5.33%**, suggesting buyers stepped in after the bond market panic and the most extreme expectations are being priced out.

**🌊 Sell-offs and dip-buying are happening at the same time**

The Philadelphia Semiconductor Index fell about **12%** in six trading days, wiping out roughly **$1 trillion** in market value as high-valuation stocks face a valuation reset. On the other hand, the VanEck Semiconductor ETF saw net inflows of over **$430 million** in three days, while the 3x leveraged SOXL fell **21%** this week yet drew a record roughly **$3.8 billion** in inflows. Aggressive money on the sidelines is furiously buying the dip, driving the bull-bear divide to an extreme.

The crypto market is also undergoing a shakeout: nearly **$1 billion** in positions were liquidated across the market over 24 hours, mostly longs, with highly leveraged traders flushed out first. **$BTC** is holding at **$80,500–$81,000** (down about **3%** over 24 hours, after briefly dipping to around **$79,800** intraday), with buyers still stepping in around the $80,000 mark.

The divergence is clear: **$ETH** fell to around **$2,350** (down about **6%**), bearing the brunt of the market’s anxiety; **$BNB** is holding at **$715–$720** (down about **3%**), roughly in line with Bitcoin. Even at the market’s ugliest, $BNB’s holders are standing firm, and support buyers haven’t fled.

With Treasury yields back around **5.1%**, the market may shift from a leverage flush to choppy consolidation and recovery. At times like this, watching how well resilient assets hold up is much more useful than trying to call the bottom. I’ll keep breaking down any new market moves—follow if this way of thinking resonates with you.