Latest / Markets with Megan: A Quick Financial Markets Update / Biggest PPI Drop Since 2023 | S3 E154 | 07-15-26

Transcript

Biggest PPI Drop Since 2023 | S3 E154 | 07-15-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: That's another really good inflation report we got today.
• 0:02
  Megan Horneman: It's Wednesday, July the 15th, and this is Markets with Megan.
• 0:06
  Megan Horneman: If you like this podcast, you can subscribe to it, hit that alarm bell, you can share it with your friends, family, colleagues, anybody who's interested in the economic data, the headlines you read, and what it means for your investments.
• 0:18
  Megan Horneman: Well, this morning we received the producer price index, and this follows yesterday's consumer price index.
• 0:25
  Megan Horneman: This is basically what that the costs of the inputs are into the goods and services that we buy.
• 0:33
  Megan Horneman: This data came in much better than expected.
• 0:36
  Megan Horneman: When you look at it in the headline level, the expectation was for it to be basically flat this in the month of June, but it actually declined by 0.3%.
• 0:46
  Megan Horneman: That's the biggest decline we've seen since October of 2023.
• 0:51
  Megan Horneman: And we had downward revisions to the prior month as well.
• 0:54
  Megan Horneman: Now we know these headlines are being very much impacted by the decline in energy prices.
• 1:00
  Megan Horneman: We saw energy prices down 6.4% for the month of June in this index.
• 1:06
  Megan Horneman: When we strip that out, and we look at just the if you strip out all the volatile items, that's food, energy, and trade, we saw prices only rise 0.1%.
• 1:18
  Megan Horneman: So that's been a very soft reading.
• 1:20
  Megan Horneman: The expectation was for them to rise 0.3%.
• 1:24
  Megan Horneman: Now, on a year-over-year basis, we're still seeing the inflation at a troublesome level here.
• 1:30
  Megan Horneman: Um, it did come down on the headline level.
• 1:33
  Megan Horneman: It's growing 5.5% now versus 6% last month.
• 1:38
  Megan Horneman: Still not great news, but we do know that headlines mainly driven by the big increase in energy prices.
• 1:44
  Megan Horneman: When you take out food, energy, and trade, that's stuck here.
• 1:49
  Megan Horneman: It's growing 5.1% on a year-over-year basis.
• 1:52
  Megan Horneman: So that matched last month's reading.
• 1:55
  Megan Horneman: Again, it didn't go any higher, but it still isn't going much, it's not going much lower.
• 1:59
  Megan Horneman: So it's something that the Fed's going to pay attention to.
• 2:02
  Megan Horneman: When we dig into the details here from the service side in this, which is important, we did see that come in better than expected.
• 2:11
  Megan Horneman: And that's really two different things.
• 2:13
  Megan Horneman: Um, portfolio and management fees were much uh weaker than anticipated, and that has to do with the weakness in the equity market.
• 2:21
  Megan Horneman: That's probably going to reverse itself as we go forward.
• 2:24
  Megan Horneman: And then airline fares came down as well.
• 2:27
  Megan Horneman: That's different than what we saw in the consumer price index yesterday.
• 2:31
  Megan Horneman: Um, transportation and warehouse housing costs as well, they came down uh 0.1%, and that has a lot to do with the decline in the fuel surcharges that we saw.
• 2:43
  Megan Horneman: So this report was better on the surface.
• 2:46
  Megan Horneman: Um, we'll take it.
• 2:48
  Megan Horneman: The Fed's gonna take it.
• 2:49
  Megan Horneman: It's likely gonna keep them on the sidelines in their upcoming meetings, but there still is a over a 50% chance that they'll hike rates in September.
• 2:59
  Megan Horneman: Part of that is because we're right back to where we were with this tension in the Middle East.
• 3:03
  Megan Horneman: Now, while oil prices aren't back to the level we saw, you know,$100,$110 a barrel, they are a bit higher.
• 3:11
  Megan Horneman: And these measures are on a month-over-month basis.
• 3:14
  Megan Horneman: So it is something we may have some give back in the coming months or at least quite a bit of volatility in this data.
• 3:20
  Megan Horneman: So for now, the Fed's on hold, but we still think it's likely, like the market does, that we may see a hike as early as September because of this data.
• 3:29
  Megan Horneman: That's all we have today.
• 3:30
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 3:33
  Megan Horneman: Thank you.