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Fed hike odds slide to 44% after mixed US jobs data

Deutsche Bank expects July PPI to rise 0.22% month over month and highlights upcoming retail sales and Michigan sentiment data as the next drivers for rates.

Reported · Written up by our desk · Central Banks

Deutsche Bank strategists say Friday’s mixed US Nonfarm Payrolls report sparked a repricing of September FOMC expectations, with futures-implied odds of a hike falling to 44%.

They describe the labor market as broadly stable and anticipate modest inflation and demand readings, with economists looking for CPI and PPI gains that remain limited, along with steadier retail sales.

Attention is set to turn to July PPI next, where Deutsche Bank expects headline producer prices to increase 0.22% month over month and core PPI to rise 0.3% month over month.

The team also expects retail sales to rise 0.3% month over month in July, though they note lower fuel prices may weigh on the headline, while the preliminary University of Michigan consumer sentiment index is expected to ease to 52.5 in August from 55.2 previously.

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