Key Takeaways
- • September PPI surged to 6.3% year-on-year, well above the 5.3% analyst estimate and the hottest reading since December 2022, according to StoneX's October 15 morning commentary.
- • Core PPI rose 0.7% month-on-month and 5.0% year-on-year, versus expectations of 0.3% and 4.4%, the highest annual core reading since 2023.
- • The spread between core CPI and core PPI widened to 2.2%, its widest since June 2022, which StoneX says historically signals stickier consumer-level inflation.
- • CME FedWatch odds of an October 25-basis-point hike fell to near 30% from roughly 50% the prior day, but remain well above the ~17% seen a week earlier.
- • Initial jobless claims of 199k for the week ending October 10 came in below the 200k estimate, reinforcing a resilient labor market that StoneX views as supportive of further Fed tightening.
Summary
StoneX's October 15, 2026 morning commentary reported that September producer price index data came in sharply hotter than expected. Headline PPI rose 6.3% year-on-year against an average analyst estimate of 5.3%, and month-on-month PPI increased 1.3% versus an expected 0.5%, the largest monthly gain since March 2022. August's figure was revised up 0.2% to 5.6%. Excluding food and energy, core PPI rose 0.7% month-on-month and 5.0% year-on-year, both above consensus, and August core was revised higher to 4.8%.
StoneX argues that producer-level pressures, visible in regional manufacturing and services surveys, were likely to reach the PPI data and that the key question now is how much is passed through to consumers. The firm noted that the widening spread between core CPI and core PPI, now 2.2%, is historically associated with stickier consumer inflation as producers try to restore margins. Against that backdrop, StoneX said the policy conversation at the Federal Reserve is becoming increasingly hawkish if the central bank is committed to its 2.0% inflation target.
Labor market data reinforced that view. Initial jobless claims were 199k for the week ending October 10, below the 200k estimate, and the four-week average rose to 198.5k. Continuing claims fell to 1.710M, in line with estimates and among the lowest levels since the first half of 2023.
Market pricing reflected these dynamics. Following Tuesday's hotter CPI print, which showed headline inflation at 3.7% year-on-year, October hike odds moved toward 50/50 before easing to near 30% after the PPI release, according to CME FedWatch. StoneX's base case remains one additional 25-basis-point hike at the December meeting, though it noted that odds of a cumulative 50-basis-point increase by year-end were roughly three times the probability of no change.
Cross-asset markets were mixed. Equity futures pointed to a lower open, with the VIX near 17.5, a one-month high. The dollar index fell 0.4% to about 102.1, and Treasury yields declined, with 2-year yields below 4.74%, 10-year yields near 5.06%, and 30-year yields around 5.40%. StoneX cautioned that the yield move could reflect positioning or short covering rather than a durable shift. WTI crude traded near $95.70, up 0.5% on the day, while Brent was down about 1.5% at above $104.40. In agriculture, markets awaited the September NOPA soybean crush report, the first look at the 2026/27 marketing year, following a weak August and delayed harvest in key crushing states.
StoneX argues that producer-level pressures, visible in regional manufacturing and services surveys, were likely to reach the PPI data and that the key question now is how much is passed through to consumers. The firm noted that the widening spread between core CPI and core PPI, now 2.2%, is historically associated with stickier consumer inflation as producers try to restore margins. Against that backdrop, StoneX said the policy conversation at the Federal Reserve is becoming increasingly hawkish if the central bank is committed to its 2.0% inflation target.
Labor market data reinforced that view. Initial jobless claims were 199k for the week ending October 10, below the 200k estimate, and the four-week average rose to 198.5k. Continuing claims fell to 1.710M, in line with estimates and among the lowest levels since the first half of 2023.
Market pricing reflected these dynamics. Following Tuesday's hotter CPI print, which showed headline inflation at 3.7% year-on-year, October hike odds moved toward 50/50 before easing to near 30% after the PPI release, according to CME FedWatch. StoneX's base case remains one additional 25-basis-point hike at the December meeting, though it noted that odds of a cumulative 50-basis-point increase by year-end were roughly three times the probability of no change.
Cross-asset markets were mixed. Equity futures pointed to a lower open, with the VIX near 17.5, a one-month high. The dollar index fell 0.4% to about 102.1, and Treasury yields declined, with 2-year yields below 4.74%, 10-year yields near 5.06%, and 30-year yields around 5.40%. StoneX cautioned that the yield move could reflect positioning or short covering rather than a durable shift. WTI crude traded near $95.70, up 0.5% on the day, while Brent was down about 1.5% at above $104.40. In agriculture, markets awaited the September NOPA soybean crush report, the first look at the 2026/27 marketing year, following a weak August and delayed harvest in key crushing states.
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