Global CB Hawkish: PPI Spikes, CPI at 4.2%; Fed Rate Hike Odds 84%; BOJ Hikes to 31-Year High
Key Questions
What were the latest inflation readings and their impact on Fed policy?
May CPI came in at 4.2% YoY with core at 2.9%, and June PPI spiked 6.5% YoY, keeping the Fed hawkish with December rate hike odds at 84%.
What happened at the Fed's June 17-18 meeting under Chair Warsh?
The Fed kept rates unchanged but Chair Warsh's first press conference turned hawkish, signaling potential future hikes, which caused stocks to sink.
How did other central banks respond to economic data?
The BOJ hiked rates to a 31-year high as the yen weakened past 160, while the ECB faced high odds of a hike and the RBA decision remained pending.
What effect did strong US data have on the dollar and gold?
The dollar rallied on strong US jobs data while gold dropped to $4,300, though Treasury yield signals suggest the dollar could fall further.
What does the Beige Book indicate about inflation?
The Beige Book confirms persistent inflation pressures amid the strong jobs report, which was partly challenged by World Cup distortions.
May CPI at 4.2% YoY (core 2.9%) and June PPI spiked 6.5% YoY (biggest since 2022) on energy costs, keeping Fed hawkish. Rate hike odds at 84% for December. Strong jobs report challenged by World Cup distortions. Gold dropped to $4,300. Dollar rallied on strong US data but Treasury yield signals now suggest the dollar could fall further. Fed met on June 17-18 under new Chair Warsh; kept rates unchanged but Warsh's first press conference turned hawkish, signaling potential future hikes. Stocks sank on the news. Beige Book confirms persistent inflation. ECB rate decision (hike >85% odds) now passed. BOJ hiked rates to a 31-year high as yen weakens past 160. RBA decision pending. Markets await further Fed guidance.