Fed Rate Hike Odds Surge to Over 85% Ahead of September Meeting
The Federal Reserve's next move is now looking increasingly likely to be a rate hike. Just five days before its next meeting on September 16, market sentiment has shifted dramatically from expecting no change in interest rates. The CME FedWatch tool currently puts the odds of a quarter-point rate hike at 85.6%, up from just 48.4% a month ago.
The catalyst for this shift is inflation data, which showed consumer prices rose 3.4% year-over-year in August, while core inflation increased 0.3% from the previous month. This has made it harder for the Fed to justify easing policy when price pressures are already proving stubborn.
Treasury yields have jumped as a result, with the 10-year yield approaching 5%, and shorter-term yields also climbing as traders price in tighter monetary policy.