The producer price index, a gauge of costs at the wholesale level in the U.S. economy, posted an unexpected 0.1% decline in August. Here’s what to know:
“Tomorrow’s CPI will carry more weight, but today’s PPI print essentially rolled out the red carpet for a Fed rate cut next week. After last week’s jobs report, though, the market was already expecting the Fed to begin an easing cycle, so it remains to be seen how much of a near-term impact this will have on sentiment” — Chris Larkin, managing director, trading and investing, E-Trade from Morgan Stanley.
“The worst-case scenario on inflation isn’t playing out. The doves will be happy to see the year-over-year number back below 3 percent. Combined with the weak jobs data recently, this keeps us on track for rate cuts. However the speed and intensity might depend more on the big consumer index tomorrow morning.” — David Russell, global head of market strategy at TradeStation.
“Inflationary pressure in PPI appears to be muted overall ... We see nothing in this report (or its implications for core PCE) that would dissuade Fed officials from cutting 25bp in September and proceeding to cut 25bp at each upcoming policy meeting.” — Citigroup economist Andrew Hollenhorst.
