1 min readMarkets reacts to the latest data
Inflation data this week gave markets something to chew on. July’s CPI rose 0.2% month-on-month, with core running at 3.1% year-on-year. Still above the Fed’s 2% target, but at least heading in the right direction. The bigger surprise was on the producer side — PPI jumped 0.9% in a single month, the fastest pace in over two years, lifting the annual rate to 3.3%. Most of this appears tariff-driven and linked to higher import costs rather than genuine demand strength, but it still muddies the policy outlook.
At the Fed, the tone is shifting. Governors Bowman and Waller are now openly calling for a September rate cut, citing a labour market cooling faster than headline payrolls suggest. The latest PPI complicates that view, likely reducing the odds of a move next month. Still, we have both core PCE, the Fed’s preferred inflation gauge, and another payrolls release before the September FOMC meeting. Weekly jobless claims and recent data revisions are showing further cracks, adding weight to calls for pre-emptive action. Trump’s public swipe at the credibility of the jobs numbers drew plenty of attention, and whether one agrees or not, it’s a reminder that economic data is rarely free from politics.
Crypto dipped after PPI news
Markets largely looked through the hotter PPI print, though crypto reacted differently. Bitcoin and Ethereum both dipped on the news, with Ethereum later recovering. Bitcoin inflows have been more cautious, at US$289m so far this week, while Ethereum continues to attract strong positive sentiment, with US$2.3bn of inflows and a new daily record on Monday of US$1.07bn.
Over the weekend, the US Treasury repo market took a notable step toward 24/7 trading. A blockchain-based deal was executed on Saturday using the Canton Network via Tradeweb, with tokenised Treasuries held at DTCC posted as collateral to borrow USDC, Circle’s dollar-backed stablecoin. The trade settled instantly without a broker-dealer in the middle, offering a potential glimpse of a future where the world’s safest collateral moves at crypto speed — and where a $27 trillion market could operate around the clock.
