The bond market is unfazed by the latest Producer Price Index (PPI) inflation reading, with traders more focused on its potential impact on the Federal Reserve’s preferred PCE inflation gauge. The PPI reading increased by 1% due to rising airfares and hospital inpatient care costs. However, this news did not affect bond prices, as investors are now more concerned about President Donald Trump’s policies.
Economic analyst Mark Streiber believes that the Fed will remain cautious before cutting interest rates, citing the less-than-inspiring inflation data. The PPI reading is expected to push the Federal Reserve’s preferred PCE inflation gauge slightly higher than its current 3.1% core consumer-price index reading. As a result, investors are holding their breath for any potential rate cuts until the effects of Trump’s policies are fully understood.
The PPI data will continue to be monitored by the Fed, which uses it as a key indicator to assess inflation trends and make monetary policy decisions. With the current inflation rate at 3.1%, the market is watching closely for any signs of easing or tightening.
Source: https://www.marketwatch.com/livecoverage/stock-market-today-nasdaq-to-lead-dow-and-s-p-lower-as-tariff-uncertainty-lingers/card/why-the-bond-market-isn-t-enamored-with-ppi-inflation-reading-GT6PhAZ8VwuFbQ79xITD