PPI Numbers Come in Cooler Than Expected

Core Insights - The Producer Price Index (PPI) for August showed a month-over-month decrease of -0.1%, indicating a significant cooling of inflation compared to expectations of +0.3% [1][2] - Year-over-year PPI decreased to +2.6% from a revised +3.1%, while core PPI also fell to +2.8% from +3.4%, reflecting a notable decline in inflationary pressures [3] PPI Details - The revision for the previous month’s PPI was adjusted down from +0.9% to +0.7%, marking the highest level in three years but suggesting a halt in inflation escalation [2] - The metric excluding food, energy, and trade saw a month-over-month increase of +0.3%, while the year-over-year figure for the same metric rose by 10 basis points to +2.8% [4] Market Reaction - Pre-market futures showed a positive reaction, with the S&P 500 and Nasdaq rising by +32 and +125 points respectively, influenced partly by Oracle's strong quarterly results [5] Federal Reserve Implications - The Federal Open Market Committee (FOMC) is set to meet next week, with expectations leaning towards a potential interest rate cut, possibly by 50 basis points instead of the previously anticipated 25 basis points [6][7] - The upcoming Consumer Price Index (CPI) data is crucial as it will indicate how much of the increased costs have been passed to consumers, with the CPI Inflation Rate remaining steady at +2.7% for the past two months [7]