Core Insights - The Producer Price Index (PPI) for August decreased by 0.1% month-on-month, marking the first decline in four months [1] - Service costs were the main drag, falling by 0.2%, the largest drop since April 2025 [1] - Year-on-year, the PPI rose by 2.6%, lower than the revised previous value of 3.1% and market expectations of 3.3% [1] Service Sector Analysis - The wholesale profit margin for machinery and vehicles dropped significantly by 3.9% [1] - Prices in various service sectors, including professional commercial equipment wholesale, chemicals, furniture retail, alcoholic beverages retail, and data processing, also declined [1] Goods Sector Analysis - Prices for final demand goods increased by 0.1% month-on-month, marking the fourth consecutive month of growth [1] - Tobacco products saw a price increase of 2.3%, leading the rise among various goods [1] - Other goods such as beef, processed poultry, printed circuit components, and electricity also recorded price increases [1] Core PPI Insights - The core PPI, excluding volatile food and energy categories, decreased by 0.1% month-on-month, below the expected increase of 0.3% [1] - The year-on-year increase for core PPI fell to 2.8%, also lower than the market expectation of 3.1% [1] Inflation Dynamics - There is a structural divergence in inflation dynamics, with persistent upward pressure on goods prices while service prices are declining [1]

Core Insights - The Producer Price Index (PPI) in the U.S. unexpectedly declined in August, marking the first drop in four months, which strengthens the case for the Federal Reserve to consider interest rate cuts [1] - The PPI decreased by 0.1% month-over-month, while the year-over-year increase stands at 2.6% [1] - Despite rising costs due to tariffs, businesses refrained from significant price hikes, indicating concerns over consumer behavior amid economic uncertainty [1] Price Trends - Excluding food and energy, the prices of goods rose by 0.3% [1] - Service costs experienced a decline of 0.2% [1] Profit Margins - In the service sector, profit margins for wholesalers and retailers fell by 1.7%, the largest drop in over a year [1] - Profit margins have shown significant volatility throughout the year, highlighting the uncertainty of trade policies on pricing and demand [1]

Group 1 - Wholesale prices fell slightly by 0.1% in August, contrary to expectations of a 0.3% increase, providing potential for the Federal Reserve to consider an interest rate cut [2][3] - Core Producer Price Index (PPI), excluding food and energy, also decreased by 0.1%, while it was anticipated to rise by 0.3% [2] - Services prices dropped by 0.2%, primarily driven by a 1.7% decline in trade services prices, contributing to lower wholesale inflation [4] Group 2 - Despite inflation being above the Fed's 2% target, officials are optimistic that easing housing and wage pressures will gradually reduce prices [5] - Concerns regarding the labor market have increased, with a report indicating nearly 1 million fewer jobs created than previously reported, raising worries about employment stability [7] - The upcoming Fed meeting will include a decision on interest rates and an economic outlook update [7]

Overview - The Producer Price Index (PPI) in the U.S. surged by 0.9% month-on-month in August 2025, marking the largest single-month increase since June 2022, with a year-on-year increase of 3.3%, significantly exceeding market expectations. This indicates a potential resurgence of inflationary pressures in the U.S. economy, prompting a reassessment of the Federal Reserve's policy trajectory [1]. Key Drivers of PPI Surge - **Service Costs Surge**: Wholesale and retail sectors saw profit margins increase by 2% month-on-month in July, with machinery and equipment wholesale producers leading the PPI increase. Additionally, portfolio management costs surged by 5.8% to 6% due to asset price volatility, which is closely tied to financial market performance. Other service prices, such as air passenger services and cable/internet services, also rose significantly, contributing to higher service costs [1]. - **Tariff Policy Impact**: The tariffs imposed by the Trump administration are gradually taking effect, leading companies to pass on higher import costs to consumers. Despite a softening demand in the first half of the year, businesses are adjusting pricing strategies to offset cost pressures. Supply chain disruptions caused by tariff policies have further increased production costs [4][7]. - **Energy Price Volatility**: While prices for oil, coal, and other fuels decreased by 2% month-on-month, overall energy price fluctuations still impacted the PPI, particularly with diesel fuel-driven intermediate demand processing costs rising by 0.8% [4]. Impact of PPI Surge on Inflation - **Leading Indicator Role**: The PPI typically reflects price movement trends ahead of the Consumer Price Index (CPI). The sharp increase in July's PPI suggests that businesses may begin passing costs onto consumers, indicating potential upward pressure on future CPI [5]. - **Core PCE Forecast Adjustment**: Institutions like Goldman Sachs and UBS have adjusted their forecasts for the core Personal Consumption Expenditures (PCE) price index, predicting a year-on-year increase approaching 3.5% in the second half of 2025, although short-term forecasts have only slightly adjusted to 2.9%-3.0% [5]. Market Reactions and Investment Strategies - **Federal Reserve Policy Adjustments**: Following the PPI data release, market expectations for a 50 basis point rate cut by the Federal Reserve in September were largely eliminated, with a 93% probability still favoring a 25 basis point cut. However, uncertainty regarding future rate cuts has increased [11]. - **Market Sentiment**: The dollar index rose due to heightened inflation expectations, while prices for safe-haven assets like gold slightly declined, indicating a suppression of market risk appetite. The stock market experienced volatility, with major indices dropping after the PPI data release [11]. - **Investment Strategy Adjustments**: Analysts recommend that investors focus on the sustainability of high-volatility service items, such as portfolio management fees, rather than broad inflation pressures. Additionally, attention should be paid to the transmission effects of tariffs on commodity prices, especially in the latter half of the year and into the first half of the next year [11]. Conclusion and Future Outlook - The unexpected surge in the PPI in August 2025 highlights significant inflationary pressures driven by service cost increases, tariff impacts, and energy price volatility. This data suggests that inflation may rise again, despite relatively moderate CPI data. The market's expectations for Federal Reserve rate cuts have shifted, with a 25 basis point cut in September still likely [14]. - The future trajectory of inflation and Federal Reserve policy will be critical focal points for the market. If businesses continue to pass on tariff costs to consumers, core PCE may rise further, challenging the Federal Reserve's inflation targets. The Fed faces the challenge of balancing inflation control with avoiding an economic hard landing, potentially leading to a more tempered rate cut pace than the market anticipates [15].

Group 1 - The Producer Price Index (PPI) in Chile increased by 5.6% year-on-year in July [1] - The month-on-month change in PPI for July was an increase of 1.2% [1]

Group 1: Economic Indicators - The US Producer Price Index (PPI) rose by 0.9% month-on-month in July, the highest increase in three years, against an expectation of 0.2%[1] - Year-on-year, the PPI increased by 3.3%, surpassing the expected 2.5%[1] - The Australian economy growth forecast for 2023 was downgraded from 2.1% to 1.7%[2] Group 2: Monetary Policy - The US Treasury Secretary indicated that conditions for a rate cut are maturing, suggesting a potential 0.25% cut in September[2] - The Reserve Bank of Australia (RBA) reduced the cash rate by 0.25% to 3.6%, the lowest in two years, aligning with market expectations[2] - The RBA maintained inflation forecasts at 3% for this year and 2.9% for next year[2] Group 3: Currency Trends - Following the interest rate decision, the Australian dollar (AUD) briefly rose above 0.655 against the US dollar (USD) but later consolidated around 0.649[3] - The AUD is expected to fluctuate between 0.61 and 0.69 against the USD in the second half of the year[3] - If the AUD stabilizes above 0.645, it may present a buying opportunity[3]

Core Viewpoint - The article discusses the impact of tariffs on inflation and consumer prices in the U.S., highlighting that the expected transmission of tariff costs to consumer prices has not been as severe as anticipated, with companies absorbing costs to maintain profit margins [2][4][6]. Group 1: Inflation and Tariffs - The Consumer Price Index (CPI) has shown a slight increase, but remains below expectations, while the Producer Price Index (PPI) unexpectedly rose [2]. - Some industries severely affected by tariffs have seen price surges, yet July data indicates a relief in price pressures for certain goods, while service sectors are experiencing increased price pressures [2]. - JPMorgan's report suggests that companies are absorbing tariff costs at the expense of profit margins, with current profit margins at historical highs allowing for cost absorption without damaging capital or operational budgets [2][4]. Group 2: Tariff Rates and Consumer Impact - Barclays reports that the actual weighted average tariff rate in May was only 9%, lower than the previously estimated 12%, indicating that the impact of tariffs may be less than expected [2][4]. - The article notes that over half of U.S. imported goods benefited from tax exemptions, which has shifted demand away from high-tariff countries [3]. - Citi Research has not found significant evidence of widespread price pressure from tariffs, attributing recent service price increases to one-time factors [5]. Group 3: Future Projections and Economic Implications - Despite potential future tariff increases, Citi's chief economist predicts that consumers will not face significant price hikes due to weakening demand, which limits companies' ability to pass on costs [6]. - Goldman Sachs forecasts that consumers will bear a larger share of tariff costs, with the proportion expected to rise from 22% to 67% if current trade policies continue [6]. - The article emphasizes the importance of understanding the extent of tariff impacts on inflation for the Federal Reserve, as persistent inflation above the 2% target complicates monetary policy decisions [7].

Group 1 - The Trump administration announced an expansion of the 50% tariffs on steel and aluminum imports, adding hundreds of derivative products to the tariff list, effective August 18 [1] - The U.S. Department of Commerce included 407 product codes in the expanded tariff list, which will incur additional tariffs due to their steel and aluminum content [1] - The tariffs on steel and aluminum are the highest since the 1930s, leading to increased production costs for manufacturers using these materials, which may result in higher consumer prices and potential job losses in the manufacturing sector [2] Group 2 - U.S. Aluminum Company reported a $20 million increase in production costs in Q1 due to tariff policies, and a $115 million increase in Q2 as a result of tariffs on Canadian products [2] - Approximately 70% of aluminum produced by U.S. Aluminum Company in Canada is sold to the U.S., where customers are now paying higher prices than in other global markets [2] - The Producer Price Index (PPI) for July rose by 0.9%, the largest increase since June 2022, driven mainly by the service sector, indicating rising cost pressures for U.S. businesses [3]

Core Viewpoint - The Federal Reserve's balance sheet shows a significant reduction in asset size since June 2022, with current figures indicating a total of $6.6436 trillion as of August 14, 2025, down $2.2714 trillion from $8.915 trillion in June 2022, primarily due to decreases in Treasury and MBS assets [7]. Group 1: Balance Sheet Overview - The asset side of the balance sheet increased by $2.772 billion this week, with a total balance of $6.6436 trillion, recovering from the previous week [2]. - Treasury assets amount to $4.2048 trillion, while MBS stands at $2.1207 trillion [2]. - On the liability side, reverse repos decreased by $43.674 billion, with a reverse repo account size of $402.201 billion [2]. Group 2: Liquidity and Reserves - Fiscal deposits increased by $51.154 billion, bringing the fiscal deposit account balance to $515.469 billion [3]. - The total liquidity recovery this week is approximately $74.8 billion, indicating a net liquidity withdrawal of about $47.08 billion [4][5]. - The reserve balance reached $3.3328 trillion, showing an increase from the previous week [6]. Group 3: Inflation and Interest Rate Outlook - The Producer Price Index (PPI) rose by 0.9% in July, exceeding market expectations, driven by rising costs in goods and services, which may impact consumer prices [7]. - Concerns about service sector inflation are growing among Federal Reserve officials, with Chicago Fed President Austan Goolsbee closely monitoring inflation's spread beyond tariff-affected goods [7]. - U.S. Treasury Secretary Scott Bessenet advocates for a more aggressive rate cut next month, suggesting a starting point of a 25 basis point reduction [8]. - San Francisco Fed President Mary Daly expressed increasing support for rate cuts due to a softening labor market, with market expectations shifting away from significant rate cuts following the recent data release [9].

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View The macro - environment shows the US dollar oscillating at a low level, which boosts non - ferrous metals. However, the copper market's fundamental demand is weak, failing to support a market rebound. Currently, copper prices remain in a narrow - range fluctuation, awaiting market drivers. The downstream demand is insufficiently supported, with high - temperature and rainy weather affecting downstream terminal demand, and the real - estate sector dragging down the market, while the power grid performs well. Although there is no significant inventory build - up in the SHFE after the copper tariff implementation, overall demand remains tepid [1]. 3. Summary by Directory Strategy Analysis - **Macro Data**: The US July producer price index (PPI) had a 0.9% month - on - month increase, the largest in three years, and a 3.3% year - on - year increase, both exceeding market expectations [1]. - **Supply**: The Indonesian smelter's maintenance was extended to mid - August. In July, China imported 2.56 million tons of copper concentrates and ores, a year - on - year increase of 18.24% and a month - on - month increase of 8.94%. As of August 8, the TC/RC fees continued to stabilize and rebound. There is no sign of a decline in copper production, and the smelter's production enthusiasm is fair. Only one smelter has a maintenance plan in August [1]. - **Demand**: High - temperature and rainy weather has led to weak downstream terminal demand. Rising copper prices have dampened downstream purchasing sentiment. The power grid performs well, but the real - estate sector is a drag. There is no significant inventory build - up in the SHFE after the copper tariff implementation, which supports domestic copper prices to some extent [1]. Futures and Spot Market - **Futures**: The Shanghai copper futures opened low, rose during the day, and faced pressure. The closing price was 79,060 yuan/ton. The long positions of the top 20 increased by 2,322 to 101,223 lots, and the short positions increased by 10 to 100,094 lots [5]. - **Spot**: The spot premium in East China was 180 yuan/ton, and in South China was 25 yuan/ton. On August 14, 2025, the LME official price was $9,751/ton, with a spot premium of - $85.5/ton [5]. Supply - side As of August 8, the spot rough smelting fee (TC) was - $37.98/tonne dry, and the spot refining fee (RC) was - 3.79 cents/pound [7]. Fundamental Tracking - **Inventory**: SHFE copper inventory was 24,600 tons, an increase of 126 tons from the previous period. As of August 14, Shanghai Free Trade Zone copper inventory was 80,700 tons, an increase of 4,500 tons from the previous period. LME copper inventory was 155,800 tons, a slight decrease of 50 tons from the previous period. COMEX copper inventory was 266,800 short tons, an increase of 9 short tons from the previous period [10].