CANADA DATA: Q2 Factory Sales -4.8% QOQ, Biggest Quarterly Fall in Five Years

Adding to the above on what looks like roughly a neutral contribution to core PCE from PPI details at first glance. 

• Portfolio-related costs look somewhat in the ballpark of limited expectations we'd seen.
• Portfolio management & investment advice: 1.9% M/M in June after an unrevised -0.8% M/M in May.
  Within that, portfolio management increased 2.2% after -0.9%.
• Citi had eyed 2.5% for portfolio mgmt whilst Nomura had looked for 4.3% for the broader portfolio & invt advice.

Fed pricing little changed to a touch more dovish in the wake of the softer-than-expected PPI data, which comes on the heels of yesterday’s CPI reading. 

• Our macro team notes that the PPI reading screens neutral to a little dovish for PCE.
• A reminder that the CPI data pointed to tariff pressures across several core goods categories.
• FOMC-dated OIS shows 0.5bp of easing for this month, 14.5bp through September, 28bp through October and 45bp through year-end. Levels little changed to 1.5bp more dovish vs. pre-data levels.
• The hawkish repricing that followed yesterday’s CPI was retraced at one stage, before the initial post-PPI dovish move faded a little.
• SOFR-implied terminal rate pricing moves to ~3.25% vs. 3.28% pre-data.

• Our crude proxy for key PPI contributions to core PCE sees another broadly neutral month in June, implying a boost of 0.02pp after a slightly upward revised 0.01pp in May (initially -0.01pp).
• For comparison, it follows -0.07pp in Apr, 0.07pp in Mar and 0.19pp in Feb.
• As such, it could leave core PCE estimates drift back a little closer to yesterday’s core CPI of 0.23% M/M vs pre-PPI core PCE estimates averaging 0.31% M/M. Of course that does also depend on what analysts expectations for particular line items.
• Reiterating how it’s not an exact science: whilst this rough proxy implies little boost from PPI details in May, there was still a slight gap between the 0.18% M/M currently seen for core PCE and 0.13% for core CPI.