The US PPI data just came out yesterday, and things are not looking good.
Let me explain.
In short, PPI is inflation from the producer side.
PPI came in at 6.5%, now at its highest level since November 2022.
The problem is, PPI is a leading indicator, unlike CPI.
This is because producers and manufacturers are the ones at the "top." They're exposed directly to commodity markets, and they're the ones making bulk purchases.
That rising input cost takes time before it's passed on to consumers.
So, if PPI is now at its highest level since 2022, there's a big chance the CPI will catch up too in the months to come.
All the more reason for The Fed to do a rate hike.
Last Friday, the S&P 500 experienced its biggest single-day loss of 2026. And funny enough, it was actually because of good news. Let me explain.
Last week, multiple US job reports came out, all beating consensus and forecasts by a wide margin, which reflects that the US economy is still going strong.
The NFP data came in at 172K, doubling the consensus estimate of 85K.
The problem is, a big reason why the Fed started cutting rates was because the job market was deteriorating. "Downside risks to employment have risen," as stated in the September 2025 FOMC statement.
With a strong job market report, there's no reason for the Fed to cut rates again.
This sparked a massive sell-off in risky assets like the S&P 500 and, in turn, Bitcoin.
So, to see a global risk-on mode once again, we need inflationary and growth data to come in soft.