BlockBeats news: On August 13, the U.S. July PPI annual rate came in at 4.7%, the lowest since March, below the market expectation of 4.9% and significantly lower than the previous reading of 5.5%; the monthly PPI rate remained flat, below the expected 0.2%. The core PPI annual rate of 4.2% matched expectations, while the monthly rate of 0.2% fell short of forecasts. Meanwhile, initial jobless claims were reported at 209,000, the highest since the week of July 11 and above the expected 202,000.
On the commodity side, the main source of cooling was energy prices, which fell 3.1% month-over-month, and food prices, which declined 0.9%. However, core final-demand PPI, excluding food, energy, and trade services, accelerated from 0.1% to 0.4% month-over-month, indicating that underlying price pressures have not fully subsided. This aligns with the moderate signal seen over the past two months, following the year-over-year CPI decline from 3.5% to 3.4% in July.
Market pricing for a Fed rate hike in September has clearly cooled, with traders now assigning a probability of around 40%. However, hawkish voices have not faded. Cleveland Fed President Harker reiterated today that rates must be raised, stating that "current policy is not restrictive," inflation is broad-based, and the Fed must be accountable for inflation data. Richmond Fed President Barkin noted that whether to hike remains an open question—there are reasons to believe inflation may ease as shocks from tariffs and oil subside, but price pressures may also be deeply entrenched, requiring either weaker demand or rate hikes to achieve the target. The overall signal leans more toward "can wait" rather than "can now pivot to easing." Upcoming August inflation and employment data, along with oil price trends, will be key variables shaping the September decision.