Risk Management
The U.S. producer price index (PPI) rose 0.9% month-over-month and 3.3% year-over-year in July, marking the fastest pace in three years. The Bureau of Labor Statistics stated that tariff costs, at their highest levels since the 1930s, are transmitting along the supply chain. St. Louis Fed President Musalem said tariff impacts could last two to three quarters, while Atlanta Fed President Bostic argued that the strong labor market provides room for policy adjustments.
The U.S. core CPI rose 3.1% year-on-year in July, up from 2.9% in June, mainly due to a rebound in service costs. Despite inflation pressure exceeding expectations, interest rate futures traders still bet on a 25-basis-point rate cut by the Federal Reserve in September, with the probability rising to 94%.
According to a Wolters Kluwer survey released Monday, 60% of business economists predict the Fed will cut interest rates by 25 basis points next month, due to a softening labor market and tariffs having only a one-time impact on inflation. 64% of respondents expect core PCE inflation to rise to 3.6% in the third quarter, fall to 3.4% in the fourth quarter, and decline to 2.3% by the end of next year. Fed officials have recently expressed divergent views, with some supporting rate cuts and others believing the persistence of inflation needs to be observed.
A survey by The Conference Board and the Business Council shows that CEO pessimism eased in the third quarter, with tariff risk ranking dropping to third and recession concerns falling from 83% to 36%.
US continuing jobless claims rose to the highest since November 2021, indicating greater difficulties for job seekers. Meanwhile, inflation expectations have risen, leaving the Federal Reserve facing a policy dilemma.
The latest Peterson Foundation survey shows that US voter confidence in the fiscal outlook fell to a 13-month low in July, with 59% believing the country is on a high-risk fiscal path and 61% expecting the debt burden to increase. Following the passage of the Trump administration's large-scale tax and spending bill, the Congressional Budget Office projects that the national debt will increase by $4.1 trillion by the end of 2034.
Data released by ISM on Tuesday showed the US services PMI fell to 50.1 in July, close to the breakeven line, with the employment index contracting for a fourth straight month and the price index reaching its highest level since October 2022. Tariff impacts have become a widespread concern among businesses, and economists expect consumer recovery to remain weak in the short term.
The latest data from The Conference Board shows the U.S. job market continues to cool: the Employment Trends Index fell to 107.55 in July, the lowest since last October; hiring difficulty among small businesses has decreased, while the share of temporary workers has risen. Economists point out that tariffs and policy uncertainty are making companies cautious, but layoffs have not yet increased significantly.
Pitney Bowes announced on Wednesday that it has appointed board member Paul Evans as chief financial officer, executive vice president, and treasurer, effective July 29, succeeding Robert Gold, who had held the role for only about five months. The company did not explain the rapid leadership change, and CEO Kurt Wolf stated that the move was not a reflection on Gold but was driven by Evans' expertise in capital allocation and financial management. Evans previously served alongside Wolf on the GameStop board, and his compensation package includes an annual salary of $600,000 along with long-term equity incentives.
U.S. President Trump signed an executive order on Thursday, planning to lift the suspension of country-specific tariffs on August 7 and impose new rates ranging from 10% to 41% on more than 60 trading partners. The executive order also includes a 25% tariff on Indian imports, as well as rates from previously negotiated trade agreements with multiple countries. Countries not listed will continue to face a baseline tariff of 10%.