August Inflation Data Looms Large as Fed Prepares for Rate Decision

U.S. markets are bracing for August inflation data after a stronger-than-expected jobs report pushed Treasury yields higher and increased the likelihood of an interest rate hike by the Federal Reserve.

The nonfarm payrolls rose by 162,000 in August, surpassing Dow Jones estimates of 53,000, with the unemployment rate remaining steady at 4.1%, signaling a robust labor market.

The strong jobs data has led to an increase in Fed funds futures odds for a September 15-16 interest rate hike, rising to 58% from 49.4%. Treasury yields have also climbed, with the 10-year note reaching levels not seen since November 2023 and the 2-year note trading at its highest since January 2025.