"China is exporting disinflation across the western world," David Brickell, director of institutional sales at crypto liquidity network Paradigm, told CoinDesk."We’re seeing it reflected in producer price inputs, but not yet fully feeding into consumer prices. Ultimately this will be good for risk as it relates to the end of the global hiking cycle."
May's annual increase of 1.1% in U.S. producer prices was the smallest in almost 2 1/2 years. The consumer price index rose 4%, the lowest in two years. Data due on Wednesday is expected to show the CPI growth rate slowed further to 3.1% in June, according to Refnitiv dataSo far, however, China's PPI data has failed to spark a risk-on rally, with bitcoin seeing little directional clarity above $30,000 and futures tied to the S&P 500 trading 0.5% lower on the day.
It appears investors are currently focusing on the negatives of the data: A continued decline in the Chinese figure points to a stalled economic recovery. Early this year, analysts widely cited China's reopening as a majorThe post-data weakness in the S&P 500 futures and Asian stock markets can be attributed to the strong relationship between global earnings and Chinese producer prices.
The U.S. 10-year Treasury yield rose to a four-month high of 4.09% last week, with the two-year yield hitting the highest since 2006a slowdown in job creation in June, the jobless rate dropped alongside an unexpected increase in average hourly earnings, keeping yields on a higher path. Higher bond yields tend to reduce the flow of money into risk assets. Yields may turn lower if Wednesday's U.S. CPI data shows a continued slowdown in the inflation rate.