Market Musings 9/8/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Will August #Inflation fuel #RateCuts or #Stagflation?
After last week’s weak #LaborMarkets data, the spotlight now shifts to #Inflation－which will set the tone for the Fed’s big meeting next week.
The week kicks off Wednesday with the Producer Price Index (PPI). In July, core producer #Inflation surged 0.9% M/M. It was the first sign #Tariffs were flowing into pricing, at least for the producers.
This time, forecasts expect just a 0.3% rise in August－still hotter than the 2% annual target but decelerating from July.
But the real headline will be Thursday’s Consumer Price Index (CPI).
Core CPI ticked up 0.3% in July with expectations for a similar move in August. That’s again above the 2% annual target, but not a runaway surge. It would also continue the narrative that #Tariffs aren’t really impacting consumer #Inflation.
However, with the producer #Inflation already showing, we still expect #Tariffs to start filtering through at some point.
So, what are markets thinking?
We expect markets will continue to rally even if #Inflation runs just a bit hotter. More moderate #Inflation growth will likely be tolerated as a “soft landing” from #Tariffs while still allowing for #RateCuts.
However, if we see CPI suddenly spikes the way PPI did last month, #Stagflation chatter will pick up again and potentially mute any #RateCuts optimism. All of this sets the stage for the Fed’s upcoming meeting and what the future of #RateCuts will look like.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.