Despite the pop in core PPI inflation in July, there appears to be little pressure lurking on the horizon in the near term. The pipeline measures remain subdued and vehicle pricing appears to have distorted the figures.
Armed with the weaker U.S. dollar, commodity prices heading north, and a strengthening economy, rising inflation pressure is still likely to emerge as a concern for the Fed. But not yet. Not yet.
While we would not get too excited, these data are just the right stuff to further trends already under way in financial markets. Whispers about Fed easing are sure to follow.