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Services Index In US Wholesale Price Report Drops Most In 16 Months
Good news! Producer price growth in the US was cooler than expected last month, data out Tuesday showed.
The headline final demand index rose 0.1% in July, the BLS said. Consensus expected a 0.2% advance.
Excluding food and energy, PPI prices were unchanged from the prior month. Unrounded, that index actually posted a decline.
Obviously, the benign read on wholesale prices will be promptly eclipsed by CPI on Wednesday, but you shouldn't discount PPI entirely: It's a kind of early hint at PCE
Feeding into the current Good News is Good News part of cycle, I expect.
September is a done deal for 25 in my view. Will they end qt? Cut 50 not 25? Jackson hole awaits.
Oh, not cutting in September at all would be an egregious mistake. Barring a wild CPI overshoot between now and then, they’ll cut next month. Assuming market pricing continues to reflect some rate-cut premium beyond 25bps to account for the odds of a 50bps move in September, a failure to deliver even 25bps would be a de facto rate hike and it’d complicate the dot plot signaling immeasurably. In short: To not hike at all next month would be a policy error bordering on incompetence.
Cut!