The PPI data coming in hot while equities and precious metals both sell off is a structurally significant signal. This is the scenario that traditional portfolio theory says should not happen — stocks and commodities are supposed to be inversely correlated with safe havens.

When both risk-on and safe-haven assets decline simultaneously, the driver is almost always liquidity contraction. Funds are raising cash to meet margin requirements, redeeming positions across the board, or repositioning ahead of expected Fed action.

The PPI data matters because it feeds directly into CPI expectations. Higher producer prices eventually flow through to consumer prices, which constrains the Fed's ability to cut rates. If the market was pricing in rate cuts and PPI says not so fast, everything reprices simultaneously.

For positioning: the short-term move is noise. The structural question is whether the Fed will prioritize inflation fighting (let rates stay high, risk recession) or growth support (cut rates, accept higher inflation). The debt servicing math increasingly forces option two.

Watch the 10-year yield for the cleanest signal.

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