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Money markets cut odds of 50bp Fed hike in December after PPI
Money markets have adjusted their expectations regarding a potential interest rate hike by the Federal Reserve in December following the release of US Producer Price Index (PPI) data. The PPI figures were below forecasts, impacting market pricing.
What was reported
October PPI rose by 0.3% month-over-month, lower than the estimated 0.4%.
Year-over-year PPI increased by 6.5%, slightly under the expected 6.6%.
Probability of a 25 basis point Fed rate hike in December increased to 91%, while the chance of a 50 basis point hike decreased to 9%.
Why it matters
The Producer Price Index is a key economic indicator that measures the average change over time in the selling prices received by domestic producers for their output. A lower-than-expected PPI can signal softer inflation pressures, leading markets to modify their expectations for central bank interest rate decisions.
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Source & attribution
This article is presented by DailyMIQ. General educational context is DailyMIQ commentary.
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