Markets are grappling with a new narrative: the risk of stagflation. U.S. headline CPI came in hotter than expected (+0.4% m/m vs +0.3% est.), driven by higher gasoline and shelter costs, even as growth indicators weaken. PPI data suggests demand destruction is underway, raising hopes that consumer inflation will cool in the months ahead. But rising jobless claims highlight a labor market under strain, leaving the Fed facing difficult choices at its upcoming meeting.
- Inflation: Headline CPI hotter than expected; core stable.
- Growth risks: Rising jobless claims highlight labor market weakness.
- Fed dilemma: Cuts may come, but perhaps too late to prevent unemployment rise.
- Commodities: Gold stable near highs; silver lifted by official sector demand.