Key facts
- US producer prices were unchanged in July.
- US producer prices dropped in June, according to revised data.
- US producer prices were below economists' forecasts for July.
- US consumer price increases were minimal.
- Traders reduced expectations of a Federal Reserve rate hike in September.
- US stock indexes opened higher on Thursday.
- Oil prices fell on Thursday.
- Argentina's monthly inflation rose to 2.1% in July.
- Argentina's 12-month inflation reached 33.8%.
- The UK economy grew by 0.3% in June.
- The UK economy expanded by 0.4% in the second quarter.
- South Korea's import prices fell 1% in July.
U.S. producer prices were unchanged in July, a development that missed economists' forecasts for a rebound and followed a revised drop in June. This data supports expectations that the Federal Reserve will maintain current interest rates. The dollar index fell slightly after U.S. producer prices were unchanged in July, following a report of minimal consumer price increases. This data led traders to further reduce expectations of a Federal Reserve rate hike in September. U.S. stock indexes opened higher Thursday, with investors weighing falling oil prices and softer-than-expected producer price inflation data. The July PPI came in at 4.7%, below expectations, strengthening bets the Federal Reserve will hold interest rates steady.
In contrast, Argentina's monthly inflation rate increased to 2.1% in July from 1.9% in June, according to INDEC data, with the 12-month inflation figure climbing to 33.8%. Separately, Britain's economy grew by 0.3% in June, surpassing expectations of zero growth. The information and communications sector, including AI companies, significantly contributed to the 0.4% expansion in the second quarter, showing early benefits from the global AI boom. South Korea's import prices declined for the second consecutive month in July, driven by a stronger won against the U.S. dollar and a decrease in oil prices. The import price index fell 1% month-on-month, following a 4.2% drop in June.
The U.S. producer price index (PPI) data for July provides further evidence of cooling inflation, reinforcing the Federal Reserve's stance on potentially pausing interest rate hikes. The flat reading suggests that inflationary pressures at the wholesale level are abating, which could translate to slower consumer price growth in the future. This scenario is favorable for equity markets, as it reduces the likelihood of further monetary tightening that could dampen economic activity.
Looking ahead, the Federal Reserve will closely monitor incoming economic data, including inflation reports, to inform its monetary policy decisions. The market is increasingly pricing in a steady interest rate environment in the near term, although future actions will depend on the persistence of disinflationary trends.