Producer Prices Miss Forecast, Supporting Case for Dovish Fed

Services Segment Contracts, Led By Accommodation and Transportation The services component of the ppi slipped 0.1% in june, reversing a 0.4% rise in may. The Decline was Driven Largely by a 4.1% Plunge in Traveler Accommodation Services and Softness in Retail Sectors Such as Automobile Parts, Airline Passenger Service, and Deposit. Transportation and Warehouse Fell 0.9%, While Trade Service Margins Were Flat. Portfolio Management Services Provides A Bright Spot, Climbing 2.2% MONTH-OVER-MONTH.

Core Ppi Holds Steady, Offering Relief on Inflationary Trends Excluding Food, Energy, and Trade Services, Core Ppi Was Unchanged In June After A Modest 0.1% Gain in May. On Annual Basis, this Index Rose 2.5%, A Signal That Underlying Producer Inflation Remains Contained. Intermediate Demand Prices – Oftten Seen As A Precursor to Consumer Inflation – Showed Limited Movement, with Processed Goods Up 0.1% and Services Down 0.1%. NotBly, Natural Gas for Utilitities Spiked 12.1%, Lifting Certain Energy-Sensitive Categories.

Federal Reserve Outlook: Is Cooling Inflation Enough? The Flat PPI Print Adds to Eviddance that whatever inflation is loming momentum, complementing softer consumer inflation readings earlier in the weeks. While the Fed Remains Data-Dependent, Continued Stability or Softness in Input Prices Could Support A More Dovish Policy Stance in The Near Term. Traders Should Monitor UpComing CPI and Employment Reports for Confirmation.

Market Forecast: Neutral to Slightly Bullish for Bonds June’s PPI Data Reinforce A Neutral Inflation Narrative, Reducing Pressure on the Federal Reserve to Tigten Policy Further. This Environment Supports A Slight Bullish Tilt for Treasury Markets, Particularly on the Short End. Equities Could Also Benefit IF Rate Expectations Soften, Thought Commodity-Sensitive Sectors Mayain Valatile Given Energy Input Costs.

More Information in Our Economic Calendar.