Consumer prices already came in hot. Now investors get the wholesale side of the picture.
The March PPI report drops Tuesday, and the setup is rough. Oil spiked during the month as the Iran war closed the Strait of Hormuz. Energy costs - the biggest swing factor in this report - are running about 12.5% higher than a year ago.
The last PPI showed prices rising 0.7% in a single month. Food jumped 2.4%. Energy climbed 2.3%. And the annual rate hit 3.4%.
That was before the worst of the energy shock. March data will show the full hit from oil's run past $100 a barrel.
The March CPI report already showed prices jumping 0.9% in one month, pushing the annual rate to 3.3%. Core CPI - which cuts out food and energy - came in softer at 0.2%, giving the Fed a bit of cover.
But here's the thing: if PPI runs hot too, it means higher costs are still working their way through to what you buy. Before the CPI report, markets priced in two rate cuts this year. Now they expect one at most.
Tuesday's number lands just days before the May Fed meeting. A hot print could push rate-cut hopes to zero for 2026. A cool one would give the Fed room - but few expect that.