PPI Leads to a Not-So-Dull Tape — 2026-08-13
Core thesis: July PPI beat expectations and sparked a broad rally in stocks and bonds, but the underlying data—marked by upward revisions to June readings—is less impressive than headlines suggest. Market enthusiasm persists anyway because bond traders aren't bothered by the nuance.
Key points:
- July headline PPI came in at 0.0% (vs. 0.2% consensus); Core PPI at 0.2% (vs. 0.3% consensus)—but June headline was revised up from −0.3% to −0.1%, and June Core rose to 0.4% from 0.2%
- Upward revisions to June matched or exceeded July's outperformance, clouding the "improving inflation" narrative
- 30-year Treasury yields fell ~5 bp (to ~5.19% when-issued); 10-year auction yesterday at 4.683% was highest since 2007, yet markets shrugged
- NDX up >1% on the day; SPX up ~0.5% but off highs; tech sector driving gains
- Summer doldrums and steady tech strength need minimal catalyst to turn positive—"don't short a dull tape" applies
Takeaway: The rally is real but rests on softer analytical ground than the headlines convey. Bond traders' indifference to revisions is enabling equity strength, particularly in tech. Watch for conviction to test if the narrative holds under scrutiny.