Market Trends & Expectations - The yield on the benchmark 10-year Treasury is closing back in on 4% [1][2] - Economists anticipate consumer prices rose slightly more than in July, with an annualized rate just under 3% [1] - A surprise drop in wholesale prices (PPI) occurred in August, falling by 0.1%, against consensus estimates expecting an increase [1] - The market was surprisingly not up more despite the magnitude of the PPI data [4][6] Potential Monetary Policy Implications - If the PPI trend continues, it could theoretically lead to deflation, although it's too early to confirm [3] - Continued reports of this nature suggest rates are likely to continue to come down, which would be positive for the markets [3][4] - If upcoming CPI data doesn't completely contradict the PPI data, the Fed may be compelled to cut rates [5] - The possibility of a 50 basis points rate cut, previously considered dramatic, now seems more plausible given weakening labor and inflation data [5][6]