Wholesale prices moved the Fed. Gold and silver broke the same day.

Daily Take

August producer prices ran at 5.4 percent over the year, up from a revised 4.8 percent, and Thursday's session repriced the Federal Reserve in a few hours. Our settlement-based estimate of a hike on September 16 went from 64.3 percent to about 75 percent. Gold gave back $53.40 and silver fell 5.42 percent on the same session, and it is tempting to hand the metals to that repricing. Thursday will not carry it. The dollar rose 0.32 percent at the same time, and a firmer dollar pushes metals the same way higher rate expectations do, so the session cannot separate the two. What it does show is which variable the market is now watching. Consumer prices landed at 8:30 this morning, five days before the Fed decides, and the composition matters more than the total. The headline held at 3.4 percent over the year while core eased, and gasoline alone carried over a third of the month's rise. That is an energy bill rather than broad price pressure, and our own estimate cannot move until tonight's settlement.

Correction: our hike estimate was never frozen through the war

Thursday's issue said our September hike estimate had not increased during this week's escalation, a fifth session unchanged at 64.3 percent. That was wrong, and we retract it. The flat reading came from comparing one day's live market snapshot against other days' official settlements. Measured on settlements throughout, the estimate held 62.1 percent from September 5 through September 8 and had already reached 64.3 percent by Thursday, a 2.2 point move that landed on the week of the tanker strikes. The war did move rate expectations. Thursday's price print moved them a great deal further.