Not surprisingly, PPI came in at a level which bolstered the administration’s case for a 50 bps rate cut: -0.1% versus +0.3% expected and 0.7% prior. In our opinion, each of these data points must now feature an asterisk meaning “consider the source.”

When Trump fired the head of the Bureau of Labor Statistics for reporting disappointing jobs data in August, it put all of Wall Street and every federal government employee on notice that no negative news would be tolerated. The move was met with a chorus of negative comments, with one of the exceptions being Lori Chavez-DeRemer, who loudly praised Trump’s move.

“I agree wholeheartedly with @POTUS that our jobs numbers must be fair, accurate, and never manipulated for political purposes,” Chavez-DeRemer wrote without offering any evidence to support Trump’s claim.

For those unfamiliar, Chavez-DeRemer is the head of the Department of Labor which houses the Bureau of Labor Statistics which, of course, publishes the PPI. She is also one of several Trump cabinet members who, per Trump’s definition, committed mortgage fraud by claiming more than one home as her principal residence. For some reason, no one is demanding she resign.

Futures, already up nearly 0.5% on Oracle’s earnings, pushed higher on the print.

continued for members…

Futures shot up on the news, then gave up most of their PPI gains until… …VIX and VX both pushed below their SMA10s, dropping about 2% (about 5% from yesterday’s highs.)

DXY slipped just 22 bps even though the 10Y gave up 32 bps.

Oil and gas, which both contributed significantly to the PPI results, are up slightly.

The most glaring negative in all this is that the 2s10s broke below the previous highs. Remember, breakdowns usually lead to corrections. While the PPI manipulation prompted SPX to open above the yellow 3.618 Fib, the bond market’s reaction will be harder to manage.

Stay tuned…