The latest economic data showed inflation rose in November, with the Producer Price Index (PPI) coming in higher than expected, while the Consumer Price Index (CPI) was in line with economists' estimates.

Interactive Brokers senior economist José Torres sits down with Julie Hyman and Josh Lipton on Market Domination to break down the latest economic data and what to expect from inflation in 2025 under President-elect Trump's second term.

"Goods disinflation was really drove the train in terms of progress from 2022 down to that two handle on inflation. Now, the concern here is that PPI begins to lead its sibling CPI. If you plot the PPI over the CPI, you realize that the PPI starts to increase historically before the CPI does," Torres says, nodding to the PPI coming in slightly hot while the CPI was in line.

"That's particularly concerning because services haven't really cooperated. Commodities have. With the price of oil. If goods start to go the other way, especially with tit-for-tat trade, harsh rhetoric on trade between Beijing and Washington, if goods disinflation begins to reverse."

In 2025, "the range of possible outcomes are particularly wide. So, what I'm focusing here is on the rhetoric between China and the US. If Beijing acquiesces to a lot of President Trump's demands, then we can have a non-inflationary economic growth cycle next year. But if China and the US to have conflict like they did back during Trump 1.0, then there's risk that we're going to have a lot of inefficiencies, particularly with goods."

To watch more expert insights and analysis on the latest market action, check out more Market Domination here.

This post was written by Naomi Buchanan.