Federal Reserve Chair Janet Yellen. Photo: public domain

This morning’s Producer Price Index printed at -0.1% for July vs. an expected +0.1%. More importantly, PPI excluding food and energy was also negative, down 0.1%, vs an expected gain of 0.2%.

Put that another way: the market expected core PPI price inflation of 2.4% annualized and instead got a negative 1.2% annual rate. That leaves the Fed looking silly. The 2% inflation target looks like the mirage of an oasis on the horizon. US Treasury yields and the dollar fell slightly on the report.

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