Fed Rate Hike Odds Rise as US Economy Defies Global Downturn

The prediction markets are now anticipating a key rate hike by the Federal Reserve due to higher market rates and rising Treasury yields. This comes after the Labor Department announced that 162,000 payroll jobs were created in August, exceeding economists' consensus estimate of 55,000. The unemployment rate remained unchanged at 4.1%, while average hourly earnings rose 0.3% by 10 cents to $37.75 per hour in August and 3.1% in the past 12 months.

However, before the September Federal Open Market Committee (FOMC) meeting, there will be another inflation data release, which could change the story. The author of this piece does not think the Fed should raise key interest rates at its September FOMC meeting but acknowledges being in a minority with that opinion.

The eurozone economy is facing challenges, with industrial production declining 0.6% in July, substantially below economists' consensus expectation of a 0.3% increase. Germany's retail sales plunged 3.4% in July, while Spain's retail sales dropped 0.9%. The U.S., on the other hand, remains an oasis in the world and is largely immune to global conflict.