Markets are digesting a surprise drop in U.S. producer prices (PPI), which slipped −0.1% in August versus expectations for a +0.3% rise. The decline signals deflationary pressures, with tariffs and higher trade costs not yet passed on to consumers. Energy prices also eased, offsetting modest goods inflation. The focus now turns to today’s CPI release, which could reveal how much cost absorption is flowing into consumer prices. The outcome may define the Fed’s next move as investors debate whether policymakers acted too late to prevent rising unemployment.
- PPI surprise: −0.1% vs +0.3% expected; deflationary pressures building.
- CPI next: Key to gauging pass-through from producer to consumer prices.
- Fed dilemma: Could earlier cuts have prevented higher unemployment?
- Safe-haven flows: Gold and silver supported by political and geopolitical instability.