A Fed key hike is now fully anticipated. The rose slightly after the Labor Department announced that the Consumer Price Index () rose 0.4% in August, which was in line with economists’ consensus forecasts. The , excluding food and energy, rose 0.3% in August, which was higher than economists’ consensus forecast of a 0.2% increase. Energy prices rose 2.1% in August, while food prices rose only 0.1%. Shelter costs rose 0.3% (owners’ equivalent rent) in August, up from 0.1% in July, and were disappointing. Goods prices, excluding food, energy and commodities, rose 0.1% in August and were the only good news in the CPI report.
The August had a good headline, but poor details. The Labor Department announced that the Producer Price Index (PPI) rose 0.4% in August, which was in line with economists’ consensus estimate. The good news is the , excluding food and energy, rose only 0.2%, which was below economists’ consensus estimate of a 0.3% increase.
The bad news was that the July core PPI was revised up to a 0.3% gain. Unfortunately, wholesale goods prices rose 1.1% in August, while wholesale service costs rose only 0.1%. Wholesale food prices rose 0.1% in August, while energy prices soared 4.2%. Bloomberg reported that this energy shock did not include the recent surge in diesel prices, since the Labor Department only collected data through August 11th.
The European Central Bank () raised its key interest rates 0.25% on Thursday and this key interest rate hike. The ECB’s rate hike put more pressure on the Fed to raise key interest rates, since big central banks tend to move in tandem.
The good news on Thursday was that Taiwan Semiconductor () announced that its August sales rose 53.3% compared to the same month a year ago. TSM is a major supplier to Apple, Microsoft, and Nvidia, so its record sales in August are a good sign for many technology stocks as well as AI and data center-related stocks.