U.S. producer prices rose 0.4% in August and 5.4% from a year earlier, a tick above the 5.3% consensus, as diesel jumped 24.1% on the month and the European Central Bank raised its deposit rate a quarter-point to 2.50%. The Bureau of Labor Statistics said final-demand goods led the move. Energy at the producer level rose 4.2%. Core PPI, which strips food and energy, rose a more modest 0.2% on the month and 4.7% year on year. July's monthly reading was revised up from flat to 0.1%. That file feeds the Fed's preferred gauge, core personal consumption expenditures. Economists now pencil core PCE near 0.2% to 0.3% for August, too high for a committee that wanted summer inflation to cool. CME FedWatch lifted the chance of a 25 basis point hike at the 15-16 September FOMC toward about 74% in some snapshots, from about 62% on Wednesday. Polymarket sat nearer 61%. The funds rate is 3.50% to 3.75%. Chair Kevin Warsh's Jackson Hole line still hangs over the building: inflation has to be moving back to 2% "clearly and at sufficient speed." Tuesday's 162,000 jobs print did not settle 16 September. Thursday's wholesale file did not either. Friday's CPI might.
In Frankfurt, the Governing Council lifted the deposit facility to 2.50%, main refinancing operations to 2.65%, and the marginal lending facility to 2.90%, effective 16 September, the same morning the FOMC votes. It is the second hike since the Iran war broke out in February. Staff now see headline inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. Core is 2.5%, 2.6%, and 2.3%. Growth was revised up to 0.9% this year. President Christine Lagarde said the Middle East conflict continues to generate inflation pressures and that the Council is not pre-committing to a path. Two central banks, one oil shock. The 10-year Treasury yield reached 4.93%. The 30-year tagged 5.34% intraday, the highest since June 2007. Treasury's $6 billion long-bond buyback did not cap that move.
Friday 11 September is still the last scheduled CPI before the vote
August CPI lands at 8:30 a.m. Eastern on 11 September, five days before the decision and one day after this PPI. July CPI rose 0.1% on the month. The last 12-month all-items reading sat at 3.4%. Headline is expected near 3.3% year on year. Core is expected to tick up on the month. If energy pass-through shows up in the consumer file, hike odds stay elevated into a Summary of Economic Projections meeting. If the core cools, 74% can snap back toward 40% in a session. That is the binary last Friday's jobs report was supposed to settle. Bitcoin slipped under $77,000 on the PPI print. Spot gold faded toward $4,330. Both are coupon-free. A quarter-point at 2:00 p.m. Eastern on 16 September, with a press conference at 2:30 p.m. and a fresh dot plot, would raise the opportunity cost of holding them. A hold after a cool CPI would do the opposite. Until Friday, treat 74% as positioning, not a forecast.