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: 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].

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].

Core Insights - The report from the U.S. Bureau of Labor Statistics (BLS) indicates a significant rise in wholesale prices in July, driven by soaring profit margins, signaling a renewed threat of inflation to the U.S. economy [1][3] Group 1: Producer Price Index (PPI) Insights - The Producer Price Index (PPI) for July showed a month-over-month increase of 0.9%, far exceeding the market expectation of 0.2%, marking the largest monthly increase since June 2022 [3] - Year-over-year, the PPI rose by 3.3%, the highest growth since February, significantly above the Federal Reserve's target inflation rate of 2% [3] Group 2: Service Inflation and Contributing Factors - Service inflation was identified as the primary driver of the overall PPI increase, with service prices rising by 1.1% in July, the largest increase since March 2022 [4] - The rise in trade service profit margins, which increased by 2%, has been linked to the ongoing impact of tariffs implemented during the Trump administration, as companies have passed some of the increased import costs onto service prices [4] - Wholesale prices for machinery and equipment rose by 3.8% in July, contributing to 30% of the service price increase, indicating significant cost pressures in the machinery and equipment sector [4] Group 3: Corporate Pricing Strategies and Economic Implications - Despite weak demand in the first half of the year, companies have adjusted their pricing strategies to offset increased costs from tariffs, further fueling inflation [5] - The extent to which companies pass tariff costs onto consumers will be crucial in determining future interest rate trends, with potential implications for inflationary pressures and consumer price levels [5] - The Federal Reserve may be compelled to adopt more aggressive interest rate hikes to combat inflation, which could simultaneously suppress economic growth and increase financing costs for businesses [5] Group 4: Global Market Impact - The unusual fluctuations in U.S. wholesale prices are expected to have a ripple effect on global markets, as the U.S. economy's policies and inflation trends influence financial markets worldwide [6] - Other central banks may closely monitor U.S. inflation dynamics and adjust their monetary policies accordingly, while global investors may reassess asset allocations in response to potential market volatility [6]

9 August 2025 | 2:04PM HKT China: PPI deflation remained deep in July Bottom line: PPI: -3.6% yoy in July (-1.8% mom annualized*) vs. GS: -3.3% yoy, Bloomberg consensus: -3.3% yoy; June: -3.6% yoy (-2.9% mom annualized*). (*seasonally adjusted by GS) Main points: 1. China's headline CPI edged down to 0.0% yoy in July from +0.1% yoy in June, as food deflation deepened (Exhibit 1). In month-on-month terms, headline CPI fell to +0.4% (annualized, seasonally adjusted) in July (vs. +1.8% mom s.a. ann in June). 2 ...

摘要 就业增长的大幅下修以及消费者价格指数（CPI）推算方法的调整，引发了人们对官方统计数据可靠性的质疑。美银认为这些数据仍然是可靠的，但建议对 初始就业数据要谨慎对待。修正是基于样本估算的固有特性，同时也是为了保证数据的及时性。替代数据无法取代官方统计数据，但可以为数据提供一种合 理性检验。 未来一周值得关注的数据：消费者价格指数（CPI）、零售销售数据和生产者价格指数（PPI）。下周的焦点将是通胀数据和零售销售数据，美银的消费者价 格指数（CPI）预测如下。美银还将获取生产者价格指数（PPI）（周四发布），整体和核心生产者价格指数（PPI）的月度涨幅预计分别为 0.2% 和 0.3%。 此外，工业生产（周五发布）预计月度下降 0.1%。 数据回顾： 强劲的申领失业金数据与生产力数据，疲软的服务业数据。美国首次申领失业金人数降至 22.6 万，接近疫情前的水平。持续申领失业金人数保持在高位， 表明劳动力市场的流动性较低。与此同时，生产力环比增长 2.4%，高于预期，单位劳动力成本温和上涨 1.6%。7 月供应管理协会（ISM）服务业指数下 降，许多受访者强调关税导致规划延误和生产成本增加。数据预览： 关税将 ...

Group 1 - The Producer Price Index (PPI) in Chile increased by 4.6% year-on-year in June [1]

Group 1 - The Producer Price Index (PPI) in Chile increased by 4.6% year-on-year in June [1]