Producer Prices Slow More Than Expected In July, Bolster Fed Rate Cut Wagers
Portfolio Pulse from Piero Cingari
The Producer Price Index (PPI) for July showed a slower-than-expected increase, reinforcing disinflationary trends and bolstering expectations for a Federal Reserve rate cut. The PPI rose by 2.2% annually, down from 2.7% in June, and the core PPI remained unchanged month-over-month. This has led to increased market speculation about a potential 50-basis-point rate cut in September. Major U.S. equity futures traded higher, and Treasury yields slightly decreased.
August 13, 2024 | 12:40 pm
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POSITIVE IMPACT
The Invesco QQQ Trust (QQQ) is expected to see positive short-term movement as tech stocks often benefit from lower interest rates, which are more likely following the PPI report.
Tech stocks, tracked by QQQ, typically perform well in a lower interest rate environment. The PPI report increases the likelihood of a rate cut, benefiting QQQ.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 70
POSITIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) is likely to see positive short-term movement due to the lower-than-expected PPI, which strengthens the case for a larger Fed rate cut.
The lower PPI reading supports the case for a larger rate cut, which is generally positive for equities. SPY, tracking the broader market, is expected to benefit.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80