On October 15, the September PPI data was released:
6.3% year over year.
It was 5.4% in August, and the market expected around 5.5–5.7%—the actual reading was even higher than expected, a substantial jump.
Yesterday, CPI came in at 3.7%, above expectations. Today, PPI came in at 6.3%, also above expectations. Two days in a row.
The relationship between PPI and CPI:
PPI, or the Producer Price Index, measures inflation at the wholesale level—the prices businesses charge distributors. CPI measures prices from the consumer's perspective. PPI typically leads CPI by about 1–3 months, so when PPI rises, CPI is likely to follow.
So the signal from this 6.3% reading is that inflationary pressure has already built up on the business side. It hasn't fully passed through to consumers yet, but the direction is clear.
Energy was the main driver in September.
Brent crude rose 14% in September alone and 42% in the third quarter. Energy prices have a more direct and immediate impact at the wholesale level, while CPI moves more slowly because other components dilute the effect.
For crypto markets:
After yesterday’s hotter-than-expected CPI, the probability of an FOMC rate hike on October 28 had already risen to 35%. With today’s PPI also coming in above expectations, that probability is only likely to rise further, not fall.
U.S. Treasury yields and the dollar index are supported, keeping pressure on riskier assets.
BTC was already in the $81,000-$82,000 range yesterday. Today’s PPI reaction is another data point to watch—the data released this week should give us a clearer answer on whether the $80,000 level can hold.
PPI hits 6.3%—what’s your take on the probability of an FOMC rate hike? On October 15, September PPI data came out:
6.3% year over year.
August was 5.4%, and the market expected around 5.5-5.7%—the actual figure came in even higher than expected, a sizable jump.
Yesterday, CPI came in hotter than expected at 3.7%; today, PPI came in hotter than expected again at 6.3%. Two days in a row.
The relationship between PPI and CPI:
PPI is the Producer Price Index—it measures inflation at the wholesale level, or the prices businesses charge distributors. CPI measures prices paid by consumers. PPI typically leads CPI by about 1-3 months, so when PPI rises, CPI is likely to follow.
So the signal from this 6.3% reading is that inflationary pressure has already built up on the business side. It hasn’t fully passed through to consumers yet, but the direction is clear.
Energy was the main driver in September.
Brent crude rose 14% in September alone and 42% in the third quarter. Energy prices have a more direct and immediate impact at the wholesale level, while CPI moves more slowly because other components dilute the effect.
For crypto markets:
After yesterday’s hotter-than-expected CPI, the probability of an FOMC rate hike on October 28 had already risen to 35%. With today’s PPI also coming in above expectations, that probability is only likely to rise further, not fall.
U.S. Treasury yields and the dollar index are supported, keeping pressure on riskier assets.
BTC was already in the $81,000-$82,000 range yesterday. Today’s PPI reaction is another data point to watch—the data released this week should give us a clearer answer on whether the $80,000 level can hold.
PPI hits 6.3%—what’s your take on the probability of an FOMC rate hike?
