WASHINGTON — Headline U.S. producer prices rose just 0.1 percent in April and 2.2 percent year over year, the Bureau of Labor Statistics reported Thursday morning, the softest year-over-year readings since early 2024 and an outcome two-tenths below the Bloomberg consensus on both the monthly and yearly measures. The report, the second consecutive softer-than-expected inflation print following Wednesday’s April Consumer Price Index, has further consolidated the soft-landing thesis that traders had been pricing across the curve.

Core PPI, which strips out food, energy and trade services, rose 0.1 percent on the month and 2.5 percent year over year, also two-tenths softer than consensus. The disinflation in core PPI was particularly pronounced in transportation services, where prices fell 0.4 percent on the month, and in healthcare services, which rose 0.2 percent after several months of stronger readings.

The report’s intermediate-goods component fell 0.3 percent month over month, the third consecutive monthly decline, reflecting the unwinding of the wartime spike in oil and chemical feedstock prices. Crude petroleum prices at the producer level fell 4.1 percent in April, with petroleum refining input costs down 3.7 percent. The pattern is largely a mechanical echo of the Brent normalization that has unfolded since the April 15 ceasefire took effect.

Markets responded in line with the trend established Wednesday afternoon. Two-year Treasury yields fell two basis points to 3.64 percent in the early going on Thursday before settling at 3.66, the dollar held its post-CPI weakness, and S&P 500 futures pushed slightly higher. The print, combined with Wednesday’s CPI release and Wednesday afternoon’s IEA demand cut, has tightened the case for a July rate cut to the point where the move is now the modal expectation across the sell side.

“This is the print that closes the door on the inflation rebound argument that some of the cautious camp had still been holding onto,” said Helima Croft of RBC Capital Markets, in a note to clients. “Headline inflation is back at the Fed’s target zone, core PCE is on a trajectory to print below 2.6 percent at the end of the month, and the producer-level data shows no pipeline pressure backing up. The committee can take this.”

Beneath the headline disinflation, however, the report contained a more nuanced signal on the energy complex that has been the subject of sustained attention since Saudi Aramco’s Wednesday analyst call. The company’s chief financial officer, on the call, had indicated that an extended period of Brent below $90 a barrel would prompt the company to review the cadence of its upstream capital program through 2027 — language that several analysts characterized as the closest Aramco has come to publicly conceding that the upstream pace would need to slow.

The Aramco signal has begun to ripple through global refining margins. Singapore complex margins for medium-sour crude rebounded to $7.20 a barrel Thursday morning, up roughly 90 cents over the week, as traders priced in the prospect of slower medium-cycle Middle East supply additions. U.S. Gulf Coast 3-2-1 crack spreads firmed to $26.40 from $25.10 at the start of the week. Valero, Marathon Petroleum and Phillips 66 each gained between 0.6 percent and 1.3 percent in Thursday morning trading on the firmer crack environment.

A senior energy economist at Goldman Sachs, in a note circulated Thursday morning, said the Aramco signal should be read in conjunction with the IEA demand cut earlier in the week. “Aramco’s framing is that the producer side is preparing to manage capital allocation to a softer demand environment, not to defend market share into oversupply,” the economist wrote. “Combined with the IEA’s revised second-quarter demand forecast, this is the producer-consumer alignment that the market was looking for. It is bearish for crude in the near term and bullish for refining margins in the medium term, and that is exactly the configuration that has been emerging through the week.”

The cross-currents had visible echoes in U.S. equity markets through the early Thursday session. The energy sector, which had finished Wednesday slightly negative, opened mixed, with the upstream-dominated independents trading lower (Devon Energy off 0.7 percent, Diamondback Energy off 0.8 percent) while integrated majors traded close to flat. The refining cohort firmed broadly. Saudi Aramco shares closed marginally higher on the Tadawul in the regional session.

The Aramco capital signal also has cross-asset implications. A senior credit analyst at Moody’s, in a Thursday research note, said the rating agency continued to assess Saudi Arabia’s sovereign credit picture as stable but flagged that a multi-year slower upstream capital cadence would reduce the medium-term flow of dividend revenue to the kingdom’s general budget. The agency’s expected next sovereign review is scheduled for September.

In Vienna, OPEC’s monthly oil market report — released Thursday morning, a day after the IEA’s — maintained a more optimistic demand outlook than the IEA’s. The cartel’s secretariat trimmed its 2026 demand growth forecast by 110,000 barrels a day, to 1.35 million from 1.46 million, but left the second-quarter call essentially unchanged. The contrast with the IEA’s 460,000-barrel-a-day second-quarter cut is the largest single-month divergence between the two forecasts since 2020.

A senior OPEC delegate, contacted Thursday afternoon, said the cartel’s secretariat had been “deliberately conservative” in its revision and that the June 1 ministerial meeting would address the underlying demand-supply balance “with the full set of data points the committee has available.” The delegate indicated that the conversation among ministers had begun to converge on a position of holding the current output level through the third quarter, but cautioned that the formal decision would be the result of the meeting’s deliberations.

For the U.S. inflation outlook, the cumulative effect of the past 36 hours of data has been to push the trajectory of core PCE meaningfully lower. The April core PCE print, scheduled for release on May 30, is now expected by most forecasters to register at 2.6 percent year over year, the lowest reading since early 2021. The print would represent the largest single-month deceleration in core PCE since the autumn of 2024.

A senior FOMC participant, contacted Thursday afternoon for context, said the committee would weigh the past two days of data alongside the May employment report, due June 6, and the May CPI release, due June 12, ahead of the June 17–18 meeting. The participant declined to characterize a personal view but said that “the inflation question has become a substantially more answerable one in the past 36 hours.”