PPI Follows CPI Trend of Cooling Inflation: What Does it Mean for Fed?

• July PPI came in unchanged month-over-month (0.0%), better than the 0.2% estimate, with core PPI also cooler.
• Year-over-year PPI dropped to 4.7% (from 5.5% prior), and core PPI to 4.2% (from 4.7% prior).
• CME Fed Watch shows September rate hike probabilities dropped to 32.1% (from 43% yesterday morning), with October, December, and January probabilities also falling.
• Initial jobless claims rose slightly to 209K but remain historically low, indicating a strong labor market.

The video discusses July's cooler-than-expected PPI data, following a similar trend in CPI, which has significantly reduced the likelihood of a September Fed rate hike. This stacking of lower inflation readings, particularly driven by falling energy prices, is seen as a positive development for the market and could influence the Fed's future policy decisions.