Bitget CFD Chief Analyst: The Real Risk in PPI Isn't a Rise, But the Restart of Cost Pass-Through

Odaily News: This week's upcoming U.S. Producer Price Index (PPI) has become a key juncture for determining whether inflation is reaccelerating. Lewis Huang, Chief Analyst at Bitget CFD, pointed out during a livestream that with nonfarm payrolls adding 162,000 jobs and the unemployment rate holding at 4.1%, U.S. demand remains resilient. If core PPI and services prices stay elevated, businesses may pass costs on to consumers, pushing up subsequent CPI and prompting the market to reprice the Fed's policy path of "keeping rates higher for longer."

Lewis Huang further analyzed two scenarios: if PPI comes in above expectations but CPI remains moderate, it means businesses lack pricing power and can only absorb costs by compressing profit margins; if both PPI and CPI exceed expectations simultaneously, it signals that the inflation transmission chain has been reestablished, potentially serving as a catalyst for a stronger dollar and higher Treasury yields. On the trading front, if PPI beats expectations and drives the dollar higher, gold and high-valuation tech stock indices like the Nasdaq 100 may come under pressure; conversely, if PPI falls short of expectations, a weaker dollar would support a rebound in gold and growth-oriented stock indices.

Lewis Huang cautioned that traders should not focus solely on the first wave of market reaction after the data release, but also observe whether PPI is confirmed by CPI, the dollar, and Treasury yields. If the PPI rise is merely a short-term cost shock, the market impact will be limited; if costs continue to pass through to consumers, the market narrative may shift back to "persistent inflation and prolonged high rates."