Treasury prices are higher this morning as geopolitics took hold of the market’s attention. Trade tensions between China and the U.S. have picked back up as Beijing responded to the Trump administration’s newest tariff proposal with tariffs of their own. Additionally, new sanctions levied on Russia as well as the dispute between the U.S. and Turkey over the detention of an American pastor have added to the current risk-off tone in the market.
While not considered to be as important of an inflation indicator as CPI, the Producer Price Index (PPI), does provide a glimpse into the costs borne by businesses. The reading for July showed no change month over month after increasing by 0.3% in June. So far it appears that the effects of retaliatory tariffs have yet to make an impact on the cost of materials used by businesses.