US PPI Flatlines as Goods Prices Rise, Powell’s Faith, Ethereum Skyrockets- 17.07.2025

This week’s global market analysis reflects a complex interplay between inflation data, central bank expectations, and regional economic trends. In the U.S., a hotter-than-expected CPI and a flat PPI highlight early signs of tariff-driven price pressures, pushing bond yields lower and reshaping the Fed’s rate cut trajectory. Meanwhile, Eurozone inflation aligns precisely with ECB targets, reinforcing a wait-and-see stance. In Asia, China’s Q2 GDP exceeded forecasts despite lingering consumer weakness, while Japanese markets held steady amid yield volatility. As investors digest these mixed signals, the spotlight now turns to U.S. retail sales and industrial production for further macro direction.

U.S. Inflation Surprise: Global Market Analysis Focus

July 16 – Producer Price Index (June):

• The PPI for final demand was unchanged month-over-month, below expectations of a 0.2% increase.
• On an annual basis, PPI rose 2.3% YoY, down from 2.7% in May.
• Goods prices increased by 0.3%, largely due to tariff-related input costs, while services prices fell by 0.1%, holding the overall number flat.
• Treasury yields moved lower; the 10-year yield declined from approximately 4.50% to 4.45%.
• Markets welcomed the softer data; futures now price in around 46 basis points of cuts by year-end, with an October rate cut probability close to 79%.

July 15 – Consumer Price Index (June):

• CPI rose 0.3% MoM, the largest increase since January.
• Annual headline CPI came in at 2.7%, while core CPI rose 0.2% MoM and 2.9% YoY.
• The data pointed to the early impact of tariffs, particularly in goods such as appliances, household items, and toys.
• Following the CPI release, the USD strengthened, bond yields rose, and expectations for immediate Fed rate cuts were pushed further out into the fall.

Market Snapshot (July 16–17)

Market Commentary

• Inflation Mix: Tariffs are clearly starting to pass through to consumer goods, but service prices remain tame.
• Monetary Outlook: While CPI reinforces the Fed’s cautious stance, the flat PPI gives some breathing room to markets. The path to a rate cut remains open, but likely not before September.
• Investor Sentiment: Bond markets responded positively to the PPI, while equities were supported by easing yields and optimism around bank earnings.

 Eurozone Inflation in Line – ECB Signals Pause in Global Market Outlook

July 17 – Final CPI (June):

• Inflation confirmed at 2.0% YoY, up from May’s 1.9%.
• Core HICP (excluding energy, food) rose 2.5% YoY.
• Services inflation was 3.3%, food/alcohol/tobacco 3.1%, non‑energy industrial goods only 0.5%, energy prices down 2.7% YoY .
• This result is right in line with the ECB’s inflation target, reinforcing expectations that the ECB will pause further rate cuts ahead of its July 24 meeting.

Asia in Spotlight – Global Market Analysis of China and Japan

July 16–17 – Asia Overview:

• Asian equity markets were mixed: The Hang Seng rose ~0.2% thanks to a rebound in tech shares, while mainland Chinese markets slipped ~0.1% amid tariff and U.S. yield worries.
• Investors are keenly awaiting Q2 earnings from key tech firms such as TSMC, which is expected to post record profits, and Netflix.
• Chinese GDP data released earlier (July 15) showed robust 5.2% YoY growth in Q2, outperforming forecasts; however, concerns linger over weak consumption and industrial jobs .

EMEA & INDIA (Asia EM Markets)

• The Indian rupee weakened slightly, trading around 86.06 per dollar, pressured by firmer U.S. yields and Fed uncertainty.
• Asia-wide, foreign capital withdrew from regional bonds in June—the first outflow in five months—totaling $2.1 billion, amid concerns over U.S. tariffs and Middle East tensions.
• Gulf markets declined broadly on trade and Fed fears, with Saudi Arabia down ~0.5%, Egypt’s benchmark losing 1%, though Dubai gained, supported by strong banking sector performance.

Commodities & Crypto React to Inflation and Policy Risks

• Gold rose nearly 1% on inflation concerns, before paring gains as markets reassessed Fed outlook.
• Oil traded sideways amid mixed signals from inflation and demand projections.
• Bitcoin hovered around $118,000, supported by sentiment around pro-crypto U.S. legislation.

Key Headlines

• June CPI rises 0.3% MoM; tariff impact emerges in goods inflation
• Hang Seng +0.2%, Shanghai –0.1% as US tariffs weigh
• TSMC, Netflix Q2 earnings in focus amid mixed sentiment
• PPI flat as services soften, easing some Fed pressure
• Bond yields drop; rate cut odds shift toward autumn
• Gold, Bitcoin firm as inflation and politics drive sentiment

 What’s Next

• U.S.: Retail Sales, Industrial Production, and Import Prices (July 17–18) are key for gauging real economy strength.
• Europe: Final CPI data ahead of the July 24 ECB meeting will be closely watched.
• Asia & EMEA: Markets await China’s trade and investment data, plus any developments in U.S.–China trade tensions.