📈 What Did PPI Tell Us?

Understanding the macro is vital right now.

PPI Release

Yesterday PPI was released and the data came in better than expected. As a reminder, PPI signifies what companies pay to produce goods.

Think of it this way: CPI is what we (consumers) pay, PPI is what producers pay.

We were expected to come in at 0.1%, and we beat expectations by coming in at -0.2% which is actually deflationary.

This confirms what we learned with CPI this week, that the economy is cooling down as we are hoping for, which enables interest rate cuts in the future.

To put this number in context, we have only had four PPI readings this low since COVID in 2020. This number is significant.

Rate Cut Probabilities

In terms of when we might see a rate cut, see below for our probabilities of a rate cut in September.

The number rose to 85% but dropped down to 65% after FOMC on Wednesday.

The Fed will likely want to see continuing data that confirms inflation is being curbed before cutting rates.

Watch this video for more analysis of PPI and the repercussions for the stock market: