the 2year treasury yield remained at its highest level since november 2007 on wednesday as traders continued to digest unexpectedly high consumer price inflation in august and a second straight monthly drop in the costs of us wholesale goods and services investors and traders were still trying to absorb tuesdays surprising august cpi which rose at a monthly rate of 01 versus the 01 decline that was expected by economists the headline annual rate also came in higher than expected at 83 and even more troubling was a doubling of monthly core inflation which strips out energy and food costs read us inflation slows again due to cheaper gas cpi shows but prices still high for almost everything else however data released on wednesday showed the cost of wholesale goods and services fell by 01 in august due to cheaper gasoline matching economists expectations for the second monthly decline in a row economists dont expect the decline in wholesale costs to be sustained though fed funds futures traders are now pricing in a 76 chance that the federal reserve lifts its benchmark interest rate by 75 basis points next week and a 24 chance of a 100 basispoint hike according to the cmes fedwatch tool what analysts are saying producer prices were relatively muted in august held down by falling energy prices and otherwise moving essentially as expected will compernolle senior economist at fhn financial said in a note all in all the august ppi didnt rise enough to further flare up anxieties from yesterdays cpi while a 100bp hike is still a possibility at next weeks fomc meeting this report wont be the guiding factor pushing the fed in either direction