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Wholesale prices increased in August, aligning with expectations, marking the final Inflation data point ahead of the Federal Reserve’s anticipated interest rate cut. The producer price index (PPI), a gauge of costs for final demand goods and services received by producers, rose by 0.2% for the month, as reported by the Bureau of Labor Statistics. This matched the consensus estimate. Excluding food and energy, PPI showed a 0.3% increase, slightly higher than the predicted 0.2%. On a yearly basis, headline PPI rose by 1.7%, while the annual rate excluding food, energy, and trade was 3.3%.

In another economic update, the Labor Department disclosed that initial filings for unemployment benefits totaled 230,000 in the week ending September 7, slightly surpassing the 225,000 estimate. Stock market futures remained steady post-report, with Treasury yields experiencing a modest decline.

Services prices drove much of the PPI increase, with a 0.4% monthly upsurge primarily fueled by services excluding trade, transportation, and warehousing. Notably, guestroom rental recorded a significant 4.8% surge. Conversely, goods prices remained flat for the month, reversing the 0.6% uptick in July. The latest PPI release follows a report indicating a 0.2% rise in Consumer prices for August, in line with expectations. Nonetheless, core prices edged up by 0.3%, slightly above projections, largely driven by a rise in shelter-related expenses.

With both Inflation reports failing to deter the Fed from its planned interest rate cut, market expectations are leaning towards a traditional quarter-point reduction. Recent data and statements from policymakers have steered Wall Street towards a more conservative rate cut, rather than a more aggressive half-point decrease. Against the backdrop of a decelerating labor market, Fed officials have shifted their focus to the growing concerns in the job market. Despite a slight increase in layoffs over recent months, the jobless claims report indicates a relatively stable situation, with continuing claims rising by a mere 5,000 to 1.85 million.

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