Tariffs Inflation

Market Musings 7/14/2025

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

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#Tariffs are starting to hit, but it’s not the checkout line… yet.

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July’s producer #Inflation just came in way hotter than expected. Core PPI rose 2.8% Y/Y and 0.6% M/M－that’s double what markets were looking for.

Just a quick refresher: The PPI tracks what domestic producers charge for goods and services－think wholesale prices before they hit consumers. The CPI is what you pay at the store.

Earlier this week, the CPI was higher, but pretty tame. However, now, the PPI is telling a different #Inflation story and #Tariffs are likely the reason.

Here’s what’s likely going on:

#Tariffs have been in place for months, but retailers may still be selling older, pre-tariff inventory.

Producers, on the other hand, are now getting hit with higher #Inflation and starting to pass those on to retailers.

Retailers might be eating some of those higher costs for now, but that can’t last forever.

The big question is when will it hit the consumer? Probably later this year, especially now that businesses have certainty about #Tariffs levels and can plan for higher prices (aka #Inflation).

What does this mean for #RateCuts?

Investors basically shrugged off the PPI report with markets ending essentially flat Thursday. Yields ticked higher, but the odds for September #RateCuts only slightly dipped.

However, the next #Inflation readings are likely to be a big deal. We’ll get July’s PCE at the end of the month, then August CPI and PPI right before the September Fed meeting.

If consumer #Inflation heats up more or if this producer spike turns into a trend, the Fed could think twice before #RateCuts. For now, this might be the canary in the coal mine or just flash in the pan…