2025-09-10 17:11

Producer Price Index falls 0.1% in August Goods prices edge up 0.1%; cost of services eases 0.2% Producer prices increase 2.6% on year-over-year basis WASHINGTON, Sept 10 (Reuters) - U.S. producer prices unexpectedly fell in August amid a compression in trade services margins and mild increase in the cost of goods, suggesting that domestic firms were probably absorbing some of the tariffs on imports. The lack of strong producer price pressures, despite import duties, could also be signaling softening domestic demand against the backdrop of a struggling labor market. The Federal Reserve is expected to cut interest rates at its policy meeting next Wednesday, with a quarter-percentage-point reduction fully priced in, after it paused its easing cycle in January because of uncertainty over the impact of President Donald Trump's sweeping import tariffs. Sign up here. "Inflation barely has a heartbeat at the producer level which shows the tariff effect is not boosting across-the-board price pressures yet," said Christopher Rupkey, chief economist at FWDBONDS. "As time goes on, one has to wonder if there are slow-growth reasons and weak economic demand that is keeping inflation in check. There is almost nothing to stop an interest rate cut from coming now." RETAILERS MAY BE EATING TARIFF COSTS The Producer Price Index for final demand dipped 0.1% last month after a downwardly revised 0.7% jump in July, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the PPI would advance 0.3% after a previously reported 0.9% surge in July. A 0.2% drop in services prices accounted for the fall in the PPI. That decrease followed a 0.7% rebound in July. Services last month were held down by a 1.7% decline in margins for trade services, reflecting a 3.9% decrease in margins for machinery and vehicle wholesaling. "It does look like retailers have been eating tariff costs in recent months," said Stephen Stanley, chief economist at Santander U.S. Capital Markets. "This is quite consistent with the commentary from second-quarter earnings reports and other anecdotal evidence. Firms have consistently said that they have held the line as long as they could, but that they would need to begin selectively hiking prices going forward." The cost of services less trade, transportation and warehousing, however, increased 0.3% while prices for transportation and warehousing services shot up 0.9%. Portfolio management fees increased 2.0%. Airline fares rose 1.0% while the cost of hotel and motel rooms increased 0.9%. Prices for dental services accelerated 0.6%. Goods prices edged up 0.1% after increasing 0.6% in the prior month. Food prices gained 0.1%, with declines in the costs of eggs and fresh fruits partially offsetting more expensive beef and coffee because of tariffs. Wholesale beef prices surged 6.0% and were up 21.1% from a year ago. Coffee vaulted 6.9% and increased 33.3% on a year-over-year basis. Energy prices fell 0.4%. Excluding the volatile food and energy components, producer goods prices rose 0.3%, indicating some pass-through from tariffs. The so-called core goods prices gained 0.4% in July. In the 12 months through August, the PPI increased 2.6% after climbing 3.1% in July. FED EXPECTED TO CUT INTEREST RATES Trump seized on the tame producer inflation to demand a big rate cut from Fed Chair Jerome Powell, whom he derisively calls "Too Late." "Just out: No Inflation!!! 'Too Late' must lower the RATE, BIG, right now," Trump wrote on his Truth Social media platform. Stocks on Wall Street were mostly trading up, with the S&P 500 (.SPX) , opens new tab and Nasdaq Composite (.IXI) , opens new tab indexes hitting intraday record highs. The dollar slipped against a basket of currencies. U.S. Treasury yields fell. Economists, however, cautioned against complacency on inflation, arguing that the PPI readings were too volatile. "More than anything, they likely reflect ongoing adjustments in business strategies to deal with the tariffs," said Oren Klachkin, financial market economist at Nationwide. "Going forward, tariff impacts will be somewhat easier to see in the second half (of the year) now that businesses have drawn down their inventories and certain tariff reprieves have ended." The impact of tariffs may be reflected in the consumer price data due to be released on Thursday. A Reuters survey of economists forecast the Consumer Price Index increased 0.3% last month after climbing 0.2% in July. Consumer prices are expected to have advanced 2.9% on a year-over-year basis in August after rising 2.7% in July. Core CPI inflation is predicted to have increased 0.3% for a second straight month. That reading would keep the annual increase in core CPI inflation at 3.1%. Firmer consumer inflation would add to labor market weakness in fueling concerns that the economy was in danger of stagflation. The government estimated on Tuesday that the economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated. That data followed the release last Friday of the monthly employment report, which showed job growth almost stalled in August and the economy shed jobs in June for the first time in four and a half years. "The Fed is almost certain to cut rates in light of worsening labor market conditions, but slow growth and higher prices continue to punish American families," said Elizabeth Pancotti, managing director of policy and advocacy at Groundwork Collaborative. https://www.reuters.com/business/cooler-us-producer-inflation-hints-softening-demand-2025-09-10/

2025-09-10 16:34

Barclays raises 2025 S&P 500 target to 6,450, Deutsche Bank to 7,000 Upgrades driven by earnings strength and AI optimism Barclays turns positive on U.S. tech; Deutsche Bank sees high valuations Sept 10 (Reuters) - Barclays and Deutsche Bank raised their year-end targets for the S&P 500 on Wednesday, citing stronger corporate earnings, resilient U.S. economic growth and optimism around artificial intelligence. Deutsche Bank increased its target to 7,000 from 6,550, while Barclays raised its forecast to 6,450 from 6,050. Sign up here. The index touched a record high of 6,555.97 earlier on Wednesday and has risen 11.2% so far this year. Barclays and Deutsche Bank join a spate of banks that recently upgraded their view on the U.S. stock market despite lingering concerns about President Donald Trump's tariffs on the economy and corporate earnings. "We expect equity valuations to remain elevated by historical standards, driven by higher payout ratios, perceptions of higher trend earnings growth...and earnings resilience with fewer significant drawdowns," says Binky Chadha, analyst at Deutsche Bank. The S&P 500 has rallied more than 30% from its April lows, buoyed by resilient earnings and investor enthusiasm around the AI boom. "Corporate earnings are solid and global GDP growth is stabilizing, but US labor market risks are worsening," say Barclays strategists, whose target suggests the S&P could end the year just below current levels. Data on Friday showed U.S. job growth weakened sharply in August and the unemployment rate rose to a near four-year high of 4.3%. Signs of a cooling labor market and tame inflation have increased expectations of U.S. Federal Reserve rate cuts this year and next, further supporting equities. Barclays expects three rate cuts before year-end, which it says will help offset labor market weakness. In addition, it lifted its 2026 target for the S&P 500 to 7,000 from 6,700. Investors will be closely watching the Fed's policy meeting next week for clues on the rate cut path and broader market direction. https://www.reuters.com/business/barclays-deutsche-bank-raise-sp-500-forecasts-bull-run-continues-2025-09-10/

2025-09-10 16:03

NEW YORK, Sept 10 (Reuters) - Investors plowed nearly $45 billion into their emerging market equities and debt portfolios in August, the most in nearly a year, but a large outflow from EM stocks outside of China pointed to a change of sentiment among investors, according to a report from a banking trade group. The $44.8 billion net inflow for last month compares with $38.1 billion in July, which was sharply revised lower from $55.5 billion, and compares with $28.2 billion in August 2024, according to data from the Institute of International Finance. Sign up here. Chinese debt and stocks took in over $39 billion net last month, while ex-China debt attracted $13.2 billion. Stocks outside of China saw a $7.4 billion outflow after three months of inflows. The shift "marks the weakest month for EM equity flows since the (Northern) spring and reflects a significant reversal in sentiment toward ex-China markets," Jonathan Fortun, senior economist at the IIF, wrote in a statement published alongside the data. Yet an external tailwind could give EM assets support, as cooler-than-expected U.S. inflation data cemented expectations that the Federal Reserve will cut borrowing costs following its meeting next week. Lower rates in developed economies help funnel investments into EMs that offer higher yields. Regionally, Asia attracted $18.1 billion, while Latin America added $8.9 billion, partly boosted by debt flows to Mexico and Brazil, according to the report. EM Europe added $8.7 billion and Middle East and North Africa $5.8 billion more, the IIF data showed. "All (regions) posted higher inflows than the previous month, yet the underlying pattern still reflects the outsized role of China in portfolio allocations," Fortun wrote. August marked the largest inflow to Chinese equities since February. “Investor positioning appears increasingly sensitive to headline risk and policy noise, especially in economies exposed to external shocks or electoral cycles,” Fortun said. https://www.reuters.com/world/china/em-portfolios-funnel-near-45-billion-august-cracks-are-showing-iif-says-2025-09-10/

2025-09-10 15:59

WASHINGTON, Sept 10 (Reuters) - The office of the Labor Department's inspector general said on Wednesday it was initiating a review of challenges the Bureau of Labor Statistics (BLS) faces in collecting and reporting U.S. economic data following recent large downward revisions to nonfarm payrolls and cuts to inflation data collection. Assistant inspector general for audit, Laura Nicolosi, sent a letter to acting BLS commissioner William Wiatrowski informing him of the review. The announcement followed on the heels of news from the BLS on Tuesday that payrolls could have been overstated by 911,000 jobs in the 12 months through March. Sign up here. "Our focus will be on the challenges and related mitigating strategies for (1) collecting PPI and CPI data, and (2) collecting and reporting, including revising, monthly employment data," the letter said. Sharp downgrades last month to May and June payrolls figures totaling 258,000 jobs angered U.S. President Donald Trump, who fired BLS Commissioner Erika McEntarfer, accusing her, without evidence, of faking the employment data. Trump has nominated E.J. Antoni, chief economist at the conservative think tank Heritage Foundation to replace McEntarfer. The BLS has suffered from years of inadequate funding under both Democratic and Republican administrations. Like all government agencies, it has been severely affected by mass firings, voluntary resignations, early retirements and hiring freezes, part of an unprecedented campaign by the White House to drastically reduce the size of government and remake it. The BLS has suspended consumer price data collection in three cities because of resource constraints. It last month ended the calculation and publication of about 350 indexes in the producer price report. https://www.reuters.com/world/us/labor-department-inspector-general-reviewing-challenges-bls-economic-data-2025-09-10/

2025-09-10 13:36

Sept 10 (Reuters) - The Federal Reserve is likely to start a series of interest-rate cuts next week and keep going through the end of the year, traders bet on Wednesday after tamer-than-expected producer price inflation last month calmed worries that price pressures would hold the central bank back from policy easing. Traders stuck to bets the Fed will start with a quarter-point reduction at its meeting next week, and continue with same-sized cuts through year-end, based on pricing of futures contracts that settle to the Fed's policy rate. The producer price index increased 2.6% in August from a year earlier, a government report showed, after climbing 3.1% in July. Sign up here. President Donald Trump took to social media shortly after the report to call for a "big" and immediate interest-rate cut, a move he has repeatedly pressed the Fed to take. Analysts said they continue to expect Trump's tariffs to push up inflation in coming months, calling the wisdom of a large rate cut into question at least for now. That's particularly so with September consumer price inflation - due Thursday - expected to come in well above the Fed's 2% target. "Producers do not seem to be facing major inflationary pressure as of now, but consumer prices will be more important to the Fed decision," wrote Scott Helfstein, head of investment strategy at Global X. The slowdown in producer price inflation could signal a softening economy, he said, and while "the Fed is likely to take notice (it) will still likely deliver a modest rate cut in September." https://www.reuters.com/business/fed-seen-course-rate-cuts-after-ppi-data-2025-09-10/

2025-09-10 13:27

LONDON, Sept 10 (Reuters) - Nebius Group (NBIS.O) , opens new tab said on Wednesday it would raise $3 billion to fuel growth in its core artificial intelligence cloud business, on the heels of its $17.4-billion deal with Microsoft (MSFT.O) , opens new tab. The financing includes a $2 billion private offering of convertible senior notes and a $1 billion underwritten public offering of the company's class A shares. Sign up here. Goldman Sachs is lead book-running manager on the public offering alongside Morgan Stanley, BofA Securities and Citigroup as additional book-running managers. Nebius said it will use the cash to finance continuing growth, including the acquisition of additional compute power and hardware, securing land plots with reliable providers and expanding its data center footprint. On Monday, Amsterdam-based Nebius announced it would provide Microsoft with GPU infrastructure capacity over a five-year term. Microsoft may also acquire additional services capacity under the deal, bringing the total contract value to about $19.4 billion. On Tuesday, its Nasdaq-listed shares soared over 49% to a record high, driven by the Microsoft deal. They are up 245% so far this year. Shares were down 5.6% in pre-market trading on Wednesday. Nebius emerged from a deal to split the assets of Russian tech company Yandex. Global demand for data center capacity has risen sharply in recent years as companies tap into new technologies to run their businesses, especially after the emergence of generative artificial intelligence. https://www.reuters.com/business/ai-infrastructure-company-nebius-raise-3-billion-fuel-growth-2025-09-10/