The U.S. Producer Price Index (PPI) surged 0.9% in July, far exceeding the 0.2% forecast and marking a significant acceleration from June’s flat monthly reading. On an annual basis, PPI rose 3.3% versus expectations of 2.5%, signaling persistent wholesale-level inflation pressures. Core PPI, which strips out food and energy, also climbed 0.9%, well above estimates.
The hotter-than-expected inflation data has fueled speculation that the Federal Reserve may delay planned interest rate cuts. CME FedWatch Tool data shows the probability of a September rate cut slipping from near-certainty at 100% to 96% following the announcement.
Cryptocurrency markets reacted swiftly. Bitcoin fell from over $124,000 to below $119,000, while Ethereum slid 4% to $4,550. Solana, XRP, and other major altcoins also saw steep declines as investors priced in the potential for higher borrowing costs.
Labor market data offered little relief, with weekly jobless claims coming in at 224,000—slightly below forecasts—indicating a still-resilient jobs market. U.S. equity index futures dropped 0.5%, the dollar strengthened, and the 10-year Treasury yield rose five basis points to 4.25%, signaling a risk-off move toward safe assets.
The sharp PPI increase underscores the challenges facing the Fed in managing inflation without derailing economic growth.
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