The U.S. PPI for July released last night exceeded expectations across the board, especially with the service sector contributing the most. This resonates with the core CPI data for July released a couple of days ago, where service inflation was still relatively strong. PPI is upstream of CPI, and some PPI sub-item data is highly correlated with the PCE price index favored by the Federal Reserve, which means that the PCE data for July, to be released at the end of the month, may also exceed expectations. This is naturally not good news for the market, as it dampens the expectations for a rate cut in September. Last night, Bessenet even called for the probability of a 50 basis point rate cut to be off the table, suggesting that the market will likely experience volatility in the short term. However, from another perspective, the better-than-expected July data will significantly raise market expectations for the August CPI and PPI, which will greatly reduce the likelihood of exceeding expectations for the August data, turning out to be a good thing. It can also be seen that American companies are adjusting the pricing of goods and services to offset the costs brought by U.S. tariffs. The extent to which companies pass on the tariff burden to consumers determines the future inflation trend and is a key factor influencing the path of interest rates.