Traders reassess Fed pivot optimism, First PPI decline since early in the pandemic, Bitcoin above $24K

​Stocks were unable to hold onto robust gains following back-to-back reports that suggest inflation has peaked. ​ After a little pushback from the Fed, Wall Street is starting to second guess how soon the Fed will be in a position to pivot. ​ Fed rate hike expectations will bounce between a half-point and 75 basis-points ahead of the September policy meeting, but it is way too early to continue to expect the next round of inflation readings to keep that declining pace.

PPI posts decline

Producer prices in July turned negative for the first time since early in the pandemic. ​ It really shouldn’t be that much of a surprise given how far energy prices have dropped over the past month. The producer price index for final demand fell 0.5% from a month earlier and increased 9.8% from a year ago, both coming in much lower than their respective consensus estimates.

Inflationary pressures are clearly easing, but a lot of that decline is dependent if oil prices continue to grind lower. ​ The risk of higher oil prices going into year-end are elevated, so this moderation in inflationary pressures might not last.

Ethereum is leading the charge higher in the cryptoverse as investor optimism grows for a successful upgrade. ​ The world’s second-largest cryptocurrency is nearing a pivotal update next month that will tackle two big problems; being much more energy efficient and faster. Bitcoin is also above the $24,000 level, but is clearly seeing massive resistance from the $25,000 level. It seems it might take a while longer for Bitcoin to rally above the $25,000 level, but when it does, its momentum could take it towards the $28,400 level initially.

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