Disinflation Reduces Fed Hike Urgency
Better-than-expected productivity gains and lower-than-expected labor cost increases suggest disinflation, which could allow the Fed to avoid rate hikes.
Too little corroboration in the last 3 days to call a trend (4 articles). Watching for it to gain traction.
"Wholesale costs for goods and services were flat in July, the Bureau of Labor Statistics reported Thursday in the latest positive sign for inflation. The report follows several other indicators telling a similar story – that after a ramp up in inflation earlier this year fueled by the Iran war and President Donald Trump's tariffs, the rate of price increases is beginning to ease."
"The tame monthly readings, coupled with similarly moderate levels in June, indicate that the energy-fueled burst earlier in the year is easing, though prices remain volatile and subject to constantly changing conditions in the Middle East."
"Underlying U.S. inflation was subdued in July, likely easing pressure on the Federal Reserve to raise interest rates. The consumer price index, excluding often-volatile food and energy categories, increased 0.2% from a month earlier... On an annual basis, it advanced 2.5%, matching the slowest pace since March 2021."
"Losses in T-notes were limited on Thursday after Q2 nonfarm productivity rose more than expected and Q2 unit labor costs rose less than expected, dovish factors for Fed policy. US Q2 nonfarm productivity rose +1.4%, stronger than expectations of +0.6%. Q2 unit labor costs rose +1.3%, less than expectations of +2.1%."