PPI Report for July in the Spotlight By Hardika Singh

Investors and economists are keeping a close eye on the producer-price index this morning to see how it could influence the Federal Reserve's interest-rate policy. Meanwhile, as markets rose through the first half of 2024, leveraged investments generated windfall profits, inspiring copycat traders to get on board and pushing prices higher. Now the tide has turned. And the death of a former Bank of America associate sparks outcry about the all-nighters and 100-hour weeks that grind down young investment bankers. Read on for this news and more.

Top News Don't Expect Inflation to Take a Turn for the Worse in PPI, CPI Reports

The PPI comes ahead of the consumer-price index for one of the few times in the year. The government on Tuesday is expected to report a 0.2% increase in wholesale prices in July, matching the gain in the prior month.

The so-called core PPI, seen as a better measure of wholesale inflation, is also forecast to climb 0.2% in July, but that would mark an increase from no change in the prior month.

Don't expect a second straight drop in the consumer-price index. The CPI fell in June for the first time since 2020, helped by a decline in gas prices.

U.S. Economy Investors Borrowed Like Crazy During the Rally. Now They're Paying the Price.

Unrest has returned to global markets over the past month , and investors are now in retreat from these once-unstoppable trades. While the market has calmed in recent days and the Dow industrials remain near their record high, traders caution that there is reason to brace for more upheaval.

Financial Regulation How Bank of America Ignores Its Own Rules Meant to Prevent Dangerous Workloads

The death of a Bank of America associate in May sparked a new public outcry over banks' treatment of young employees and the potential consequences of too much work. The experiences at Bank of America are echoed in banks across Wall Street, where long hours and deference to bosses' commands, no matter how unreasonable, are the norm industrywide.

In jobs where entry level salaries can reach $200,000, many bankers say they hesitate to raise concerns about their working conditions.

Forward Guidance Tuesday (all times ET)

6 a.m.: NFIB Index of Small Business Optimism

8:30 a.m.: PPI

Wednesday

8:30 a.m.: CPI

Research U.S. Investment-Grade Supply Concentrated in Long-Dated Bonds in August

U.S. corporate bond issuers are issuing new bonds in an effort to lower borrowing costs by refinancing expensive debt, CreditSights analysts say in a note. "The [U.S.] primary market kicked off a traditionally slower month with a robust pace of issuance, pricing $47.4 billion in new IG paper in the first 9 days of August." New issuance has been concentrated in long-dated bonds and mainly the "lower rated IG segments" like single-As and triple-Bs, they say. "The long-end has led issuance, with $24 billion pricing in the 10-year plus segment and $7.6 billion in the 7-year to 10-year segment," CreditSights says. - Miriam Mukuru

Basis Points The U.S. budget deficit in July increased 10% from a year ago , driven by higher government spending and bigger interest payments on the national debt. The gap between federal spending and what the government collected in taxes rose to $244 billion in July, from $221 billion in the same month a year earlier. - MarketWatch The AI-driven, energy-hungry data-center boom was bound to bring up uncomfortable questions : Will it raise energy bills and, if so, who will shoulder the costs? America's largest wholesale power market is starting to see the results. - Jinjoo Lee Signs of a slowdown are surfacing across the travel economy . On recent earnings calls, hotel and travel company executives have pointed to lethargic domestic leisure demand from U.S. consumers. The word "softness" came up 16 times combined on the calls of Expedia, Marriott, Airbnb and Hilton. - Allison Pohle and Margot Amouyal U.K. wage growth cooled in the three months to June, reassuring news for the Bank of England as it battles inflation, though persistent tightness in the labor market could give its rate setters pause when considering interest-rate cuts in the coming months. The headline measure of average earnings, excluding bonuses, between April and June were 5.4% higher than a year earlier, down from 5.8% from March to May, according to the Office for National Statistics. - Ed Frankl Strong inflation in services is reason to keep U.K. monetary policy tight, says Bank of England committee member Catherine Mann, who voted against the bank's decision this month to cut interest rates. Inflation in consumer prices has now eased to the BOE's 2% target, but services prices continue to run hot. Wages, which are central to inflation in services, continue to grow more quickly than forecast, Mann tells the Financial Times in an interview. - Joshua Kirby Economic sentiment in Germany slumped this month , as weakening views of the health of the global economy exacerbated an already gloomy outlook. The ZEW Indicator of Economic Sentiment, which tracks analysts' economic expectations for the next six months, fell 22.6 points on month to 19.2 in August. That was well behind a forecast of 29.0 from a consensus of economists polled by the WSJ, and ranks as the largest on-month fall since July 2022. - Ed Frankl China's central bank launched a relending tool to aid flood-hit areas, as record-breaking rainfall battered the world's second-largest economy. The People's Bank of China set the relending quota at 100 billion yuan, equivalent to around $13.94 billion, to support agricultural and small businesses in 12 regions that have been struck hard by heavy rains this summer, according to an official statement. Turkey booked a narrower current-account deficit in May, the result of the return of tourism income as the summer season got under way. The country's balance of payments, which gauges the gap between inflows and outflows, showed a deficit of $1.24 billion in May compared with the $5.44 billion reported for April, the Turkish central bank showed Friday. - Ed Frankl Australian consumer confidence saw solid growth last week amid rising expectations that the Reserve Bank of Australia's next move will be to lower interest rates. Still, the overall level of confidence remains subdued and consistent with a recession in the economy. Consumer confidence rose 2.6 points last week to 83.9 points, with the four-week moving average climbing 1.4 points to 83.2 points, according to a survey by the ANZ Bank and pollster Roy Morgan. - James Glynn Australian wages grew by slightly less than expected in the second quarter, but concerns about the overall pace of wage hikes against a backdrop of stalled productivity growth are likely to keep the Reserve Bank of Australia cautious about cutting rates. The wage price index rose 0.8% in the second quarter from the first quarter, the Australian Bureau of Statistics said Tuesday. The increase was just below the increase of 0.9% expected by economists. - James Glynn Singapore's economic outlook seems brighter, as resilience in external demand and a recovery in the key electronics sector helps guard against headwinds elsewhere, the trade ministry said as it adjusted the city-state's growth forecast for the year. The Singapore economy grew 2.9% in the second quarter from a year earlier, according to revised data from the Ministry of Trade and Industry released Tuesday. That matched the advance estimate compiled in July and compared with growth of 3.0% in the first quarter. - Amanda Lee and Fabiana Negrin Ochoa Sudan is now experiencing the world's biggest humanitarian crisis, including in the western region of Darfur, where new atrocities have prompted warnings of another genocide and international experts earlier this month confirmed the world's first famine since 2017. More than half of the country's 48 million people are suffering from hunger , while one out of four have been forced from their home. By some estimates, as many as 150,000 Sudanese have been killed. - Gabriele Steinhauser The Organization of the Petroleum Exporting Countries slightly lowered its forecast for oil-demand growth , citing softening expectations for China at a time when market concerns over the top crude importer's outlook have been weighing on prices. The Vienna-based cartel now forecasts demand to grow by 2.11 million barrels a day this year-reaching a total of 104.3 million barrels a day on average-from 2.25 million barrels a day previously. - Giulia Petroni Global oil-demand growth is still forecast to slow to under a million barrels a day this year and next, with a continued slowdown in Chinese consumption weighing on the outlook, the International Energy Agency said. The Paris-based organization estimates that global demand will grow by 970,000 barrels a day this year and by 953,000 barrels a day the next-marginally lower than previous estimates of 974,000 and 979,000 barrels a day. - Giulia Petroni About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

08-13-24 0716ET