A simple line on the gold chart is powering an undefeated trade… Click for details!
Hey folks,
Yesterday I told you the real drivers this week would be PPI and CPI — two key inflation reports that Wall Street watches like a hawk.
This morning, we got the first one: PPI, or Producer Price Index. That’s the number that measures inflation at the wholesale level — basically what it costs businesses to produce goods before they ever hit the shelves.
And it came in softer (a.k.a. lower) than expected.
Markets loved it. The S&P ripped right to new all-time highs at the open. Traders took it as a sign inflation is cooling, which keeps alive the hope that the Fed might actually cut rates sooner rather than later. Possibly even as soon as the next interest rate decision one week from today.
But here’s the thing: after the initial pop, the market faded. By this afternoon the market had given back much of those gains, pulling back toward yesterday’s close. That’s a pretty common pattern — “sell the news” after the first wave of excitement wears off.
Gold didn’t bite either. Normally a soft inflation print would give metals a tailwind. But gold mostly shrugged, hanging near $3,700 without much reaction. That tells me traders are waiting for tomorrow’s Consumer Price Index (CPI) reading before making a bigger move.
So what’s next?
- If CPI comes in soft as well (CPI are the prices consumers like you and I actually pay at the store), then we could see a much stronger follow-through rally in stocks and metals.
- If CPI is hot — higher than expected — then today’s PPI relief might vanish fast, and markets could roll back over and head lower.
That’s the tension right now. One inflation read isn’t enough — but two back-to-back would really move the needle.
So for today, the story is simple: PPI gave us a taste, but CPI is the main course.
I’m digging into this and more on today’s Profit Panel — if you missed it, catch the replay here.
Stay sharp,
— Geof
