PPI data delivers a "first blow" to the market! Gold briefly broke below the $2400 mark
The rise in US PPI data in June exceeded expectations, with a month-on-month growth rate increasing to 0.2% and a year-on-year growth rate rising to 2.6%. After the data was released, gold fell below $2400, silver dropped by 3%, and the US dollar index rose. This higher-than-expected PPI data may dampen the optimism brought by CPI data and have an impact on the Fed's interest rate cuts. Institutional analysis suggests that the changes in PCE inflation may not be as friendly as implied by CPI data
As Wall Street assesses when the Federal Reserve will feel comfortable cutting interest rates, the latest PPI data on Friday seems to have dealt a blow to the market.
The rise in US June PPI data exceeded expectations, as an increase in service provider profit margins offset the impact of consecutive months of declining commodity costs. The month-on-month growth rate rose to 0.2%, higher than the expected 0.1%. The year-on-year growth rate rose to 2.6%, higher than the expected 2.3%. In addition, the data for May was also revised higher.
After the data was released, gold plummeted below the $2400 mark in the short term, then rebounded slightly, while silver saw an intraday decline of up to 3%, and the US dollar index rose nearly 20 points before retreating.
The higher-than-expected PPI data contrasts with last night's CPI data, where the closely watched CPI saw its first decline since the outbreak of the COVID-19 pandemic, paving the way for the Federal Reserve to potentially cut interest rates as early as September.
Institutional analysis believes that the slight optimism brought by the CPI data may be dampened, as the overall PPI and core PPI excluding food and energy rose more than expected. Furthermore, significant upward revisions were made to previous PPI data, leading to larger errors in the year-on-year indicators. Data analysts need to carefully study the details and identify the components of PCE inflation.
As the preferred inflation gauge for the Federal Reserve, the changes in PCE may not be as friendly as implied by yesterday's CPI data. The June PCE data is scheduled to be released on July 26.
Overall, this data has not fundamentally altered the market's expectations for a potential interest rate cut by the Federal Reserve at the September meeting. The Federal Reserve's next policy meeting is set to take place at the end of July, with widespread expectations that the Fed will maintain interest rates at the meeting