IS POWELL LOSING DIRECTION?

The US PPI and Core PPI indices have just been announced, and this is not a positive signal for the Federal Reserve. US PPI reached 3.4%, higher than the expected 2.9%, marking the highest level since February 2025. Core PPI hit 3.9%, surpassing the forecast of 3.7%, the highest since January 2025. This indicates that core inflation is showing signs of heating up again, and here’s why this is concerning: First, the impact of recent oil prices has only just begun to reflect in inflation data. Second, the labor market is weakening as the unemployment rate rises, while GDP shows the US economy is facing significant difficulties. Additionally, many other negative factors are emerging: The housing market has become the least affordable in many years. The gap between buyers and sellers has reached record highs. The private credit market is beginning to show signs of stress. Geopolitical tensions between China and Taiwan are raising concerns about an “AI bubble.” Global uncertainty continues to increase. Therefore, the market currently believes that the likelihood of interest rate cuts in 2026 is low, which is unfavorable for risk assets. What’s next? Today, the FOMC interest rate decision and the Fed Chair’s press conference will take place. Most likely, the stance will be “hawkish.” This is because the Fed’s top priority remains controlling inflation, and so far, despite tightening policies, this goal has not been achieved as expected. Not to cause panic, but based on current data, this FOMC meeting may have a tone similar to November 2025.