PPI Surges 0.9% in July, Shaking Fed Rate Cut Heps and Rattling Bond Markets

Core and Supercore Measures Flash Warning Signs The Inflation Beat Wasn’s Limited to Headline Data. Core Ppi, Excluding Food and Energy, Also Rose 0.9%, Tripling Consensus Expectations. The Supercore Measure – Hohich Strips Out Food, Energy, and Trade – Ganeded 0.6%, Marking The Sharpest MONTHLY RISE IN 28 MONHS.

These Figures Indicate A Reacceleration in Ocessing Price Pressures, Particularly TRUBLING GIVEN THAT The Federal Reserve Watches Supercore Inflation As a Proxy for Stickier Service

Services Inflation Leads the Surge Much of the july inflation came from services, with final demand servand service prices climbing 1.1%, also the strongest monthos While Traveler Accommodation and Securities Brokerage Services Added to the Momentum.

This Broad-Based Rise in Service Costs Could Signal More Sustaned Inflation, Making IT HARDER for Policymakers to Justify EASING FINANCAL CONDITIS.

Policy Implications: September Cut Now Likely With PPI Readings Bloowing Past Forecasts Across All Tiers -Hadline, Core, and Supercore – The Federal Reserve May Hesitate to Ease Rates at Its UpComing Meeting. While One Inflation Report Doesn’T Set Policy, This Print Runs Counter to Recent EXPECTIONS FOR A SEPTEMBER CUT.

Markets May Now Recalibrate Toward A “Higher-Foror-Longer”, Particularly if Next Week’s CPI or Employment Reports Show Similar Strength.