Tariff effects? US producer prices, UK trade and Europe’s industrial production
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Why are US producer‑price increases seen as a sign of tariff impact?
US inflation isn't beaten. There's been a rise in producer prices, which has got markets repricing their expectations for a September rate cut. All that 50 basis point talk might have been very short-lived. UK GDP was better than expected, but we weren't expecting much, to be fair. And European industrial production takes a hit from tariffs and retail sales today for the US and China and whatever happens in Alaska tonight as well. It's Friday, it's the 15th. of August twenty twenty five, it's the morning call from Nab. Good morning. Well it's a flat day for US equities. What can I say? The Dow S P and Nasdaq all largely unchanged at the close, but it's a very different story for Europe where the Eurostocks fifty closed up naught point nine percent, the DAC's up naught point eight percent, same for the CAT current, just naught point one percent though for the FTSE one hundred in the UK.
The US dollar is up naught point four percent on the DXY, almost up to ninety eight point three, a naught point six percent drop in the euro, not point three. Lower for the pound, and the Aussie is down 0.8%, down below 65 US cents now. And bond yields have reversed direction with a six basis point rise in 10 year treasuries, up five for ten year Gilts, up three for ten year bunds in Germany. Aussie 10 years yesterday, we were at 4.21%, now five basis points higher than that on futures this morning. And Bitcoin that had a record of 124.5 thousand. US dollars yesterday fell quite a bit overnight, almost down to one hundred and eighteen thousand, in part because Treasury Secretary Scott Bessant said that the US would not be buying additional Bitcoin for President Trump's crypto strategic reserve.
Although, you know, now he's talked uh the price down. Uh maybe they will. Who knows? And oil quite a bit higher, uh two point one percent up for WTI, one point nine percent for Brent, heading back up to sixty seven. A barrel now and there's a naught point seven percent drop in gold. So a lot of the movement we saw overnight came from the US producer prices, the PPIs. Here's Nabs Rodrigo Cotrill in Sydney. I mean uh it was flat in June, the uh PPI read. It was expected to rise a little in July, but actually it rose naught point nine percent in the month, which is I think the biggest single month increase since july twenty twenty two. So this was significant.
Yes, Phil. It it's really interesting in a sense that it's showing you that the these price pressures are coming and and at this stage it's obviously uh the producers or if you like imp importers that are uh are taking on the hit.
How might the Fed’s reaction to higher PPIs affect September rate‑cut expectations?
Uh and the question of co of course will be w what happens going forward? W will they carry on taking that on or or will they start passing it on? So In theory we think, you know, history tells you that eventually it does get passed on to to the consumer. Uh and that's why it's important to remember that we're only at the early stages of this sort of tariff impact, um, which again, you know, from a Fed perspective, um, it plays to the view that uh only with time they will actually get a better picture of what the impact is. Um so it you know, it it argues for the view of kind of fed chip. Powell that you still need to be patient to to wait to see how these things play us out.
Yeah. And and also this obviously feeds into the core PCE deflator as well. So it does you know, the the inflation number that the Fed uses gets influenced by this too.
Yeah, exactly. So I mean uh some of the economists that we follow from the US are suggesting that this, you know, basically essentially means that the the PCE should should rise by one tenth from two point eight to two point nine. Um but when you look at the at the charts it it basically tells you that you know that PCE is starting to creep up. Um so there's a there's a new little trend if you like, uh heading up rather than down. And that plays to to the whole sort of, if you like, reaction function of of the Fed, um, where, you know, are they really gonna be comfortable looking through holding the belief that this is just uh a one off, nothing to see here, or will they get concerned that um, you know, particularly in terms of inflation expectations or
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Chapters
8 chapters
1
Why are US producer‑price increases seen as a sign of tariff impact?
0:01–2:28
2
How might the Fed’s reaction to higher PPIs affect September rate‑cut expectations?
2:28–5:05
3
What does the sharp fall in the UK trade deficit reveal about tariff pressure?
5:05–7:18
4
Why did Eurozone industrial production drop in June after a May rise?
7:18–9:43
5
How are Japan’s GDP and industrial‑production numbers linked to recent tariff talks?
9:43–12:44
6
What are the key takeaways from today’s US and China retail‑sales data?
12:44–15:13
7
Why is the US government buying a stake in Intel and what does it mean for state capitalism?
15:13–17:09
8
What could the upcoming Trump‑Putin meeting in Alaska mean for future tariff policy?
17:09–18:55