Rate-Hike Odds Jump As Fuel Costs Push US Producer Prices Higher

In a relatively unusual turn around, US producer prices hit today ahead of tomorrow’s CPI. Interestingly Consumer prices get all the headlines, it is PPI that offers the most read-throughs for Core PCE – The (old) Fed’s favorite inflation gauge).

Headline producer pries were expected to rebound significantly from July’s flatline as oil prices rebounded on re-escalations in the MidEast, and they printed right in line, up 04.% MoM in August (with July’s revised up to +0.1% MoM. That lifted the annual PPI gain to +5.4% YoY (hotter than expected)…

Core PPI (Ex Food and Energy) rose a cooler than expected 0.2% MoM (+0.3% MoM exp), and pulled Core producer prices up 4.6% YoY (as expected)…

Energy was the biggest driver with Transportation and Warehousing costs jumped while Trade costs deflated…

Higher crude, higher PPI Energy…

And that has lifted rate-hike odds for next week…

Will Warsh deliver another major surprise (not hike)?