Core producer prices ran at a 2.4% annualized pace in August
Headline wholesale inflation accelerated to 5.4% over twelve months while the monthly core gain slowed to 0.2%. Traders go into Friday's CPI with a 64% chance of a September hike priced in.
Reality
- Evidence62
- Adoption
- Not scored
- Hype gap−12
- Incentives20
- Confidence58
One conditional line from Christopher Waller moved September hike odds from 63.2% to a coin flip. The squeeze that followed force-closed $415 million of shorts against $92 million of longs -- forced buying, not investor demand.
Perspective Coverage
3 publishers
- Builder
- Builder 12%
- Operator
- Operator 35%
- Investor
- Investor 53%
Reality
- Evidence58
- Adoption24
- Hype gap+38
- Incentives55
- Confidence62
Waller's 3.05% inflation trend takes 13 points out of the market's hike odds
Fed funds futures went from 63% positioned for higher rates to roughly even in a single morning, and the number doing most of the work may be a Commerce Department measurement change worth 20 basis points.
Reality
- Evidence58
- Adoption52
- Hype gap+18
- Incentives62
- Confidence57
Kramer stakes a coin-flip September hike on the thin chart above current Treasury yields
July headline PCE at 3.7 per cent puts a September Fed hike near even money, and the load-bearing piece of the argument is a chart claim about how little sits above today's 2-year and 10-year yields.
Reality
- Evidence28
- Adoption
- Not scored
- Hype gap+44
- Incentives63
- Confidence33
A hawkish read of Warsh puts two Fed hikes in the price before year-end
Two more hikes get into the price on the strength of one speech, while the Bank of Japan looks at shrinking business investment, which leaves the widening policy gap resting on projections due the same month.
Reality
- Evidence26
- Adoption
- Not scored
- Hype gap+18
- Incentives52
- Confidence30
Conference Board's chief economist is betting on Warsh's vote, not the inflation prints
Dana Peterson expects no hike next month while markets price one, and her reasoning rests on a consumer decline now reaching independents and Republicans rather than on inflation reports that will not exist by the time the committee sits.
Reality
- Evidence52
- Adoption
- Not scored
- Hype gap+20
- Incentives62
- Confidence55
A twenty-point jump in September hike odds reprices the AI trade the earnings just validated
Nvidia, Salesforce and CrowdStrike all beat, and software repriced by a fifth in one session on the argument that AI capex is additive. Then Warsh moved the odds of a September hike to 55% and the tape barely blinked.
Reality
- Evidence57
- Adoption68
- Hype gap+31
- Incentives84
- Confidence52
Three regional Fed presidents voted to hike against a quarter annualizing at 0.49%
The 3.4% headline that drew three dissents for immediate hikes is carried by nine older months running near 4.4% annualized. Clearing those months out of the window takes nine more monthly prints.
Reality
- Evidence38
- Adoption45
- Hype gap+20
- Incentives55
- Confidence45