US PPI Inflation Comes in at 2.6%, JPMorgan Gives Dire Warning

Key Insights:

• The headline PPI inflation comes in at 2.6% while the PPI month-over-month inflation dropped despite Trump tariff jitters.
• The PPI increased slowly month-over-month, eventually resulting in traders fully pricing two Fed rate cuts this year.
• Bitcoin and other crypto prices fell ahead of Friday’s options expiry and geopolitical tensions in the Middle East.

Highly anticipated price index (PPI) inflation in the U.S. came in at 2.6%, in line with forecasts, increasing for the first time after three months. Also, PPI inflation increased 0.10% in May from a revised -0.2% in April, rising less than expected.

Bitcoin price and Ether saw a slight rebound from a 2% drop earlier amid geopolitical tensions in the Middle East and new tariff plans by President Donald Trump.

After the CPI inflation cooled in the U.S., traders expected the Federal Reserve to cut interest rates two times this year. PPI inflation print has significantly boosted odds for two rate cuts.

At the time of writing, the CME FedWatch showed two fully priced rate cuts in September and October, respectively. The probability of the Fed interest rate cut in September increased to 62% and 42% in October.

Headline PPI Inflation Comes in at 2.6%

The U.S. Bureau of Labor Statistics released the latest data on PPI inflation for May. As per the report, the annual Producer Price Index (PPI) comes in line with expectations at 2.6%, but increased from a revised print of 2.5% in April. The core PPI inflation dropped to 3% from 3.1% previously.

The monthly PPI and core PPI inflation increased 0.1%, declining from 0.2% in the previous month. The inflation prints for April were revised by the bureau.

As per the Wall Street data, Ameriprise, BMO, and JPMorgan expect hotter prints, which could have challenged dovish Fed sentiment. Downside bets were from Citigroup and Standard Chartered, suggesting disinflation still has momentum.

JPMorgan Warns About Impact from Escalation in US-Iran Tensions

JPMorgan analysts warned that a potential military strike on Iran may drive oil prices up to $120 per barrel. This surge in oil prices could drive inflation higher in the U.S., pushing CPI back to 5%.

The warning was in line with JPMorgan CEO Jamie Dimon’s dire warning about the weakening US economy as the effects of pandemic-era stimulus fade.

Earlier reports revealed that US officials were informed that Israel is fully prepared to launch an operation against Iran. Notably, oil prices are nearing $69 per barrel for the first time since March 2025.

The US dollar index (DXY) extended its decline on Thursday, falling below 97.8 to reach its lowest level since 2022. This occurred as a result of as renewed trade tensions and geopolitical risks weighing on the market sentiment.

Moreover, the 10-Year US Treasury yield dropped 6-week low to 4.361%, at the time of writing. Traders were closely watching a key 30-year bond auction, which will provide additional insight into demand for longer-duration debt.

US President Donald Trump continued to call for a 100 bps interest rate cut, sparking discussion in the crypto market.

Bitcoin and Crypto Market Reactions

As per 10x Research, fears of a collapsing U.S. consumer sentiment are likely overstated. It added that “rather than hard data being driven by soft sentiment, sentiment may have been unduly influenced by negative media coverage.”

Moreover, the crypto market braces for 28K BTC options with a notional value of more than $3 billion set to expire on Friday on Deribit. At the time of writing, the put-call ratio was 0.95, suggesting a slightly bearish sentiment among traders. Notably, the max pain point is at $107,000, indicating a high chance of further retracement in BTC price.

242K ETH options with a notional value of almost $0.7 billion are set to expire, with a put-call ratio of 1.18. Also, the max pain point was $2,700 at the time of writing. Sentiment has turned bearish for Ethereum as evidenced by the put-call ratio and max pain data.

BTC price dropped 2% in the past 24 hours, with the price trading at $107,023. The 24-hour low and high were $107,407 and $110,384, respectively. Furthermore, the trading volume remained flat in the last 24 hours. Analysts have raised concerns over massive liquidation in the short term, with potential end of its rally.

Meanwhile, ETH price declined 2% in the past 24 hours, with the price trading at $2,735. The 24-hour low and high were $2,733 and $2,877, respectively. Furthermore, the trading volume decreased by 5% in the last 24 hours, indicating a decline in interest among traders.

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