Hot US PPI Sinks US Stocks as Stagflation Fears Return
January’s PPI (Producer Price Index) printed +2.9% year-over-year (YoY) towards a +2.6% forecast, with core PPI surging +3.6% versus +3.0% anticipated, sending US equities decrease and reviving stagflation speak throughout crypto and macro communities.
The Producer Price Index measures wholesale-level inflation. This is what companies pay earlier than prices go via to customers, making it a number one sign for Federal Reserve (Fed) coverage choices.
Why it issues:
- Services costs drove the core beat, with month-over-month core PPI rising +0.8% towards a +0.3% forecast, greater than double expectations.
- The S&P 500 fell -0.87%, the Dow Jones dropped -1.38%, and the Nasdaq slid -1.09% following the discharge, reflecting instant repricing of rate-cut expectations.
- A hotter-than-expected PPI reduces the chance of near-term Fed cuts, lifting yields and pressuring danger property, together with Bitcoin (BTC) and altcoins.
- Rising producer prices alongside slowing GDP development creates a stagflation situation the place the Fed can’t minimize with out reigniting inflation or maintain with out slowing the economic system additional.
The particulars:
- Headline PPI got here in at +2.9% YoY (prior: +3.0%); core PPI at +3.6% YoY (prior: +3.3%), per knowledge released February 27 at 8:30 AM ET.
- Month-over-month: headline +0.5% (exp. +0.3%), core +0.8% (exp. +0.3%), pushed by a companies part surge.
- Trade companies margins climbed +2.5% as a major driver of the core beat.
- S&P 500 futures had been already down 57 factors earlier than the info hit, signaling broader stress past the PPI print alone.
- The upside got here from trade-services normalization, not from broad input-cost acceleration.
The huge image:
- Analysts like Crypto Rover and Max Crypto flag a stagflation sign: core PPI rising whereas GDP cools. This mixture typically limits central financial institution flexibility.
- The Fed’s rate-cut timeline faces additional strain as back-to-back inflation beats problem the disinflation pattern heading into March.
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