PPI came in softer than expected for July. Rate hike odds barely moved — they were already near zero and staying there.
Market's been pricing peak rates for months. This data just confirms the Fed's probably done hiking. Now it's all about the hold-and-wait game.
Cooler producer prices = less input cost pressure = lower odds of inflation re-acceleration. That's the bull case for equities right now. But don't get too comfortable — one hot CPI print and the narrative flips fast.
Watch how this flows through to consumer prices. If PPI cooling doesn't translate to CPI cooling, the Fed stays hawkish longer than expected. That's the risk.
For now, this supports the soft-landing narrative. Bonds like it. Growth stocks like it. But we've seen this movie before — data cools, market rallies, then something breaks or inflation resurges.
Stay flexible. Rate expectations can shift violently on a single data point.
Market's been pricing peak rates for months. This data just confirms the Fed's probably done hiking. Now it's all about the hold-and-wait game.
Cooler producer prices = less input cost pressure = lower odds of inflation re-acceleration. That's the bull case for equities right now. But don't get too comfortable — one hot CPI print and the narrative flips fast.
Watch how this flows through to consumer prices. If PPI cooling doesn't translate to CPI cooling, the Fed stays hawkish longer than expected. That's the risk.
For now, this supports the soft-landing narrative. Bonds like it. Growth stocks like it. But we've seen this movie before — data cools, market rallies, then something breaks or inflation resurges.
Stay flexible. Rate expectations can shift violently on a single data point.