13.08.2026 - Inflation Relief - not the End of the Story
US producer prices came in softer than expected today, providing another positive inflation signal for markets.
The Producer Price Index (PPI) was unchanged in July, below expectations for a 0.2% increase. June was revised to a decline of 0.1%.
Core PPI, excluding food and energy, increased 0.2%, also below the 0.3% consensus estimate. However, core PPI excluding trade services rose a stronger 0.4%.
On an annual basis, the picture remains less comforting: headline PPI stands at 4.7%, while core PPI is at 4.2%.
Markets reacted positively to the softer print. US equity futures moved slightly higher, Treasury yields declined and traders further reduced expectations for a Federal Reserve rate hike in September.
Markets:
Equities: US futures reacted slightly positively to the inflation print
Bonds: yields falling after inflation print - US 10y yield above 4.67%, Japan 10y yield 2.85%
Commodities: Oil prices slightly lower, WTI around USD 81/barrel and Brent around USD 87/barrel
Precious metals prices lower, gold above USD 4’390/oz, silver trades above USD 65/oz
Currencies: US dollar slightly lower, Japanese Yen weakens, USDJPY 159
Cryptos: continue to trade sideways - Bitcoin back towards USD 63k
Volatility: The VIX index remain low, 14.5 (good opportunity for hedging)
My View: What surprises me most about the July inflation data is how little of the rise in oil and broader commodity prices has so far filtered through to headline inflation.
The latest PPI report follows several other indicators pointing in the same direction: after inflation accelerated earlier this year, driven partly by the Iran war and President Donald Trump's tariffs, the rate of price increases is beginning to ease.
But I would be very careful extrapolating this trend.
As highlighted repeatedly in recent Market Insights, commodity prices are rising on a broad basis. It is not only oil. Industrial metals, precious metals and agricultural commodities have all moved higher, creating higher input costs across a wide range of industries.
These pressures typically do not feed through to consumer prices immediately. There is a lag.
Therefore, I do not expect inflation to cool as much or as sustainably as markets currently hope. Inflation is likely to remain persistent, and investors still need to adapt to a structurally higher-inflation environment.
The Fed, in my view, remains behind the curve.
Interestingly, market expectations have shifted substantially over the past few days. Traders have reduced expectations for a September rate hike and are increasingly pushing the next potential move into October or December.
But September should not be written off.
Between now and the September 15–16 FOMC meeting, another round of economic data, commodity-price developments and geopolitical headlines could quickly change the inflation outlook again.
Markets are celebrating softer inflation today. The bigger question is whether it will stay soft.
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