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Market Pulse: PPI Data Out, and Preparation for Tomorrow's CPI Data

Published: Sep 10, 2025
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PPI figures landed far softer than expected, flipping risk sentiment bullish. With markets pricing in imminent Fed rate cuts, tomorrow’s CPI is the critical test—any upside surprise could shift the equation fast.

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Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.


PPI Data Out!

PPI MoM: Forecast 0.4%, Actual -0.1%

We have just had the release of the PPI data which has come in extremely soft. This suggests that the tariff pass through effects aren't as bad as thought, and therefore the FED has a clear path to cut rates, with full focus on the labour market.

Markets' Reaction So Far + Our Expectations:

The market has reacted positively, risk-on. BTC up, Nasdaq and Russel up, Yields down. The market is clearly saying that the FED have the all clear to cut rates. Let's see if this price action holds.

Preparing for Tomorrow's CPI Data:

The focus will now move to tomorrow's CPI data. This is what the markets are expecting:
  • Core Inflation MoM: Forecast 0.3%
  • Core Inflation YoY: Forecast 3.1%
  • Inflation MoM: Forecast 0.3%
  • Inflation YoY: Forecast 2.8%
The market is priced for the FED to cut Interest Rates at all the remaining Meetings this year to get in front of a weakening labour market. So, the market will be looking for the inflation numbers to come in below, or as forecasted for that to not upset the new rate cutting cycle that we're likely moving into. Markets are essentially just looking to avoid an upside surprise in the data.

Scenario 1: the data comes in below or in line with forecasts.

Should the data come in below or in line with the forecasts, the markets will likely rally on that as it would confirm rate cuts whilst the FED don't have to worry about the inflation component of their mandate.

Scenario 2: the data comes in hot (above forecasts).

Should the data come in hot, the market can take this in its stride as the FED have suggested that they're willing to look through inflation, calling it transitory (due to tariffs being a one-time price hike). Markets might go down very slightly but could recover. If the data comes in well above forecasts, then the market may sell down on this as it'll be pricing out some of the cuts that are currently priced in.

Plan:

We remain optimistic going into tomorrow's data release, particularly after the PPI numbers today. We remain positioned and we're expecting continued strong performance from the Majors. We don't expect the data to change the path for rates which we expect will come down from next weeks' Meeting, and continue to come down going into the end of the year. It's our base case that this is bullish for risk assets.

Base Case:

Soft PPI, and potentially this means a softer CPI tomorrow. Therefore, we remain risk-on and long majors and selective memes. We're looking for a continuation higher in the market here.

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