US PPI Data Far Exceeds Expectations

The US Department of Labor announced that the Producer Price Index (PPI) for July surged 3.3% year-on-year, far exceeding the market expectation of 2.5%, marking the largest increase in three years. More concerning is that this rise is not driven by a single category, but rather a widespread increase in the costs of goods and services. Ole Hansen, Head of Commodity Strategy at Saxo Bank, astutely pointed out that this unexpectedly high PPI data could indicate that the upcoming core PCE inflation data for July will also be high.

The unexpected rise in inflation data has directly impacted market confidence. Previously, some traders had bet that the Federal Reserve might implement a massive 50 basis point rate cut in September, but such expectations have cooled significantly. St. Louis Fed President James Bullard's remarks have added to the gloom, as he clearly stated that a half-point rate cut is "not necessary" given the current economy is close to full employment and inflation is above target.

According to the "FedWatch Tool," the probability of a 25 basis point rate cut in September is 90.4%, down from 94.3% before the PPI release.

Comerica Bank Chief Economist Bill Adams stated, "Tariffs are pushing up transaction prices between businesses, which will ultimately translate into consumer prices. This report adds another hurdle for the Fed's rate cut in September. However, upcoming labor market data will have a greater impact on the Fed's next decision."

Due to the recovery in demand for the US dollar, spot gold hit a new weekly low near $3330/ounce during Thursday's US trading session. Financial markets were shocked by the recent inflation-related data from the US, as the PPI was much hotter than expected following the mild CPI data released earlier this week for July.

Ole Hansen, Head of Commodities at Saxo Bank, said, "Gold fell because the US PPI increase was higher than expected, which could dampen rate cut expectations, as this may lead to a rise in the July core Personal Consumption Expenditures (PCE) index, thereby making the Fed cautious about cutting rates." #BTC再创新高