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🔴🇺🇸 PRODUCER INFLATION RISES STRONGLY IN THE UNITED STATES.
➡️ The year-over-year Producer Price Index (PPI) rose +3.3% vs. +2.5% expected.
➡️ The monthly PPI rose +0.9% vs. +0.2% expected.
➡️ The monthly Core PPI (excluding food and energy) rose +0.9% vs. +0.2% expected.
➡️ The year-over-year Core PPI rose +3.7% in July vs. +2.9% expected.
🔴🏦🇺🇸 The probability of a rate cut for September was little changed, still holding at 94%.
➡️ The possibility of a third rate cut in 2025 fell to 50% from 54% before the release of US producer inflation.
🔴🏦🇺🇲 Fed's Musalem (votes in 2025)
➡️ Rules out a 0.50% rate cut: data doesn't support it.
➡️ "Tariffs drive inflation in essential goods and services; the impact could last 6-9 months or more."
➡️ The labor market remains strong: weaker demand and supply of jobs, without mass layoffs.
➡️ Musalem now sees more risk in employment and less in inflation; the payroll breakeven rate should be below 50,000.
➡️ Warns that aggressively lowering rates could raise inflation expectations.