PPI pushed September rate hike odds up in the futures markets. The Fed Funds futures implied odds of a September hike increased to 68%. Today's move is different in an important way. The longer end of the SOFR and Fed Fund futures curves moved notably as well. The SOFR curve has moved up between 10-11.5 bps through all 27 and 28 contracts. Basically, pricing in ~40% higher chance of an extra hike. This is a change from recent volatility that largely moved the timing of fed increases but had relatively small impact on the final level of the expected hiking cycle. The SOFR move is reflected in the FF futures where the implied probability of one or two hikes by June 27 decreased and the probability of 3+ hikes increased notably (from 52% to 67%)

PPI could be the bigger mover than CPI next week purely because of the schedule. PPI lands Thursday, CPI Friday. If PPI comes in hot, market participants will not wait 24 hours for CPI confirmation. Hawkish Fed bets go on immediately.

PPI report shows inflation has been falling from the sky over the last few months. Everyone predicting sky-high inflation was wrong and all the fear porn peddlers look ridiculous in hindsight. Stop listening to these people.

PPI lands at 8:30 ET. The mistake is preparing for only one answer. A useful event plan asks: • What is priced in? • What would surprise? • What reacts first? • What makes you stand down? Which branch do you usually forget?

US PPI just dropped 🚨 📈 September: +1.3% (biggest jump since March 2022) 📅 vs a year ago: +6.3% ⛽ Gasoline: +20.3% Excluding food, energy & trade: +0.5% Yesterday’s CPI: +0.6% Fed meets Oct 27-28. Inflation will definitely be the star of the show