Hassan Maishera
TL;DR
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US headline PPI rose 0.4% in August, matching forecasts and accelerating from July.
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Annual producer inflation reached 5.4%, exceeding the 5.3% forecast.
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Bitcoin has slipped to $77,000 as the 10-year Treasury yield rose to 4.90%.
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Nasdaq 100 futures extended their decline to 1.05%.
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The ECB raised its benchmark rates by 25 basis points and increased its 2027 and 2028 inflation forecasts.
Bitcoin (BTC) has dropped to the session lows at $77,000 on Thursday as hotter annual US producer inflation pushed Treasury yields higher and weighed on risk assets.
Markets also reacted to the European Central Bank’s decision to raise interest rates by 25 basis points. Although widely expected, the move and the bank’s higher inflation projections reinforced concerns that monetary policy could remain restrictive.
US Producer Prices Rise 0.4% in August
The US Producer Price Index increased 0.4% month over month in August, matching economists’ forecasts but accelerating sharply from July’s 0.1% rise.
Core PPI, which excludes volatile food and energy prices, provided a more encouraging signal. The measure increased 0.2%, below the 0.3% forecast and July’s 0.3% reading.
The mixed report showed that underlying monthly price pressures moderated even as headline producer inflation remained elevated.
Annual PPI Exceeds Market Forecasts
On an annual basis, headline PPI climbed 5.4% in August, exceeding the 5.3% consensus estimate and rising from 4.8% in July.
Core PPI increased 4.6% year over year, matching economists’ expectations but accelerating from the 4.3% recorded in July.
The stronger annual readings may increase concerns that inflation remains persistent, potentially complicating the Federal Reserve’s path toward less restrictive monetary policy.
Bitcoin and US Stock Futures Extend Losses
Bitcoin remained close to its session low of $77,500 following the inflation report as investors reduced exposure to risk-sensitive assets.
The 10-year US Treasury yield extended its advance and climbed six basis points to 4.90%. Rising bond yields can pressure Bitcoin and technology stocks by increasing the relative appeal of fixed-income investments and tightening financial conditions.
US equity futures also deepened their losses, with Nasdaq 100 futures falling 1.05%.
The market reaction suggests investors are focusing more heavily on the acceleration in annual inflation than on the softer monthly core reading.
ECB Raises Interest Rates by 25 Basis Points
The European Central Bank raised its key interest rates by 25 basis points, matching market expectations.
The Main Refinancing Operations Rate increased from 2.40% to 2.65%, while the Deposit Facility Rate rose from 2.25% to 2.50%.
The ECB also raised its inflation projections for 2027 and 2028 while leaving its 2026 forecast unchanged. The revisions indicate that policymakers expect price pressures to remain elevated beyond the near term.
The ECB said the economic outlook remains highly uncertain, with inflation risks tilted to the upside and economic growth risks leaning to the downside.
Its warning highlights the difficult balance facing policymakers: keeping rates high enough to control inflation without causing a sharper economic slowdown.
The euro edged lower against the US dollar following the announcement, trading near $1.1615. Meanwhile, Bitcoin could remain volatile as traders assess elevated inflation, rising government bond yields and tighter monetary policy on both sides of the Atlantic.
