US PPI Inflation at 2.6%, JPMorgan Warns of Potential Oil Price Surge

The US Producer Price Index (PPI) inflation for May was released by the Bureau of Labor Statistics, showing a 2.6% annual increase, in line with forecasts. However, the monthly PPI and core PPI inflation increased only 0.1%, lower than expected.

Despite the slight drop, traders are concerned about the potential impact on inflation due to rising oil prices. JPMorgan warned that a military strike on Iran could drive oil prices up to $120 per barrel and push CPI back to 5%.

The warning comes as traders fully price two Fed rate cuts this year, with the CME FedWatch showing a 62% probability of a rate cut in September and 42% in October. The US dollar index extended its decline on Thursday, falling below 97.8, while the 10-Year US Treasury yield dropped to a 6-week low.

The crypto market is also affected by the rising tensions, with Bitcoin price dropping 2% in the past 24 hours and Ethereum price declining 2%. The trading volume remained flat for BTC and decreased by 5% for ETH.