Cool PPI Sends Stocks to the Nosebleeds, Yields South: Aug. 13, 2026 — 2026-08-13
What moved & why: Cooler-than-expected PPI (4.7% y/y vs. 4.9% expected, flat m/m) marked the second consecutive tame inflation print, extinguishing rate-hike fears and triggering a broad risk-on rally. Fed watchers pushed the projected start of tightening from September to December.
Cross-asset:
- Equities: S&P 500 and Russell 2000 hit fresh records; 9 of 11 principal sectors advancing on broad participation.
- Rates/Treasuries: Treasury curve plunged ~7 bps across maturities; long-end yields above 5% now viewed as unreasonable given 2.5% core inflation (lowest since March 2021).
- Dollar: Weakened on increasingly dovish Fed prospects and sinking inflation expectations.
- Oil/Commodities: WTI hovering ~$80/bbl despite geopolitical tensions (Washington-Tehran stalled); energy shock contained; commodities lower across the board.
- Crypto: Catching bids amid risk-on sentiment.
- Volatility: Protection instruments relatively unchanged.
Econ / Fed angle: PPI headline fell to 4.7% y/y from 5.5% y/y (June); energy, transportation/warehousing, and food drove declines. Initial claims rose to 209k (above 202k estimate) but continuing applications fell to 1.777M (below 1.8M projection), signaling subdued layoff appetite. Dual softening in hiring and price pressures has shifted Fed expectations toward later tightening; bond bears citing fiscal deficits and debt issuance as justification for elevated yields, but author argues duration offers capital-gains potential in slowdown scenario.
Watch next: September seasonal dynamics; potential Washington-Tehran deal; further inflation prints; retail sales (50% probability of 6th consecutive monthly expansion flagged for next day).