PRIMER - US PPI data is due at 13:30BST/08:30EDT

• Analysts expect headline PPI to rise by 0.2% M/M in July (prev. -0.3%), with the annual rate cooling to 4.9% Y/Y (from 5.5%). Core PPI is seen +0.3% M/M, picking up from a prior 0.2%, though the annual rate is seen falling to 4.2% Y/Y (from 4.7%).
• On Wednesday, CPI data for July was in line with expectations, showing a cooling vs June, which helped trim some Fed hike bets.
• With the PPI and CPI in hand, econometricians will be able to gauge how the Fed’s preferred measure of inflation, PCE (due 26th August), will look. Writing after the CPI release, analysts at Goldman Sachs said they initially expect July core PCE to rise 0.23% M/M, noting that upcoming methodology changes could create volatility in PCE readings and lower annual core inflation; Pantheon Macroeconomics sees July’s core PCE rising 0.16% M/M, while Oxford Economics sees 0.2% M/M. The projections will be revised after the PPI release.

A PPI print arriving the day after an in-line CPI sits in the shadow of its consumer counterpart: the established pattern is that CPI anchors the rates move and PPI modifies it at the margin, mainly through its read-across to core PCE rather than as a standalone signal. The transmission channel is the component mapping, since the portfolio management, healthcare and airline fare categories in PPI feed directly into the PCE deflator, which is why the street's core PCE estimates are framed as provisional pending this release. The expected configuration, a modest headline rebound off a negative prior against a cooling annual rate, is the kind of mixed print that has historically resolved through the PCE translation rather than the PPI headline itself. A beat or miss concentrated in the PCE-relevant components has tended to move the front end and Fed pricing more than one driven by trade services or energy, which wash out of the preferred measure. The flagged methodology changes are an additional source of noise around the annual comparison. The follow-ons are the revised bank PCE estimates after the print and the PCE release itself later in the month, which is where this sequence typically resolves.