A Comment -- General Comments From an Expert (A Commentary)

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. The markets have been climbing back over the past couple of weeks amid a slew of economic events. The Federal Reserve announced its interest rate decision in late July, hiking interest rates by 75 basis points, and preliminary numbers for the Q2 US GDP came in around (0.9%). The Q2 Canadian GDP preliminary growth numbers came in at 4.6%, demonstrating resilient economic growth in the face of inflation and monetary tightening. Oil continues to trade lower, and top executive comments about subsiding supply chain constraints and inflationary pressures provide investors with a glimmer of hope. The US inflation reading came in at 8.5%, lower than analyst forecasts of 8.7%, and this has fueled a risk-on rally. In this market update, we aim to break down the US inflation reading and what to expect going forward. Unlock Premium - Try 5i Free

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. The Producer Price Index (PPI) measures changes in prices of goods and services at the producer/manufacturer level, rather than the consumer level. The PPI is traditionally known to be a leading indicator for future inflation, as a softer increase in the PPI puts less pressure on producers to increase their prices to consumers. When producers face input cost inflation, they in turn raise the prices of their goods and services to keep pace with inflation, resulting in higher inflation. The US PPI month-over-month change for July came in below analyst expectations at (0.5%) vs 0.2%, and this represents the first monthly decline since April 2020. This decline in PPI is encouraging to investors in that it signals that the headwinds for higher inflation are easing. Unlock Premium - Try 5i Free