Fed Rate Hike Probability Falls as Oil Prices Drop

The Federal Reserve's rate hike probability has decreased to 58.4% in September, according to CME's 'FedWatch', which shows that the cumulative probability of a 25 basis point rate hike drops to 58.4%. The recent drop in oil prices has alleviated inflation concerns and helped lower the market's expectations for interest rates.

Brent crude oil fell below $80 as the market digests expectations of the Strait of Hormuz reopening, with U.S. Treasury Secretary Bessent stating that an agreement could be reached by September 4th or 5th. The White House has advanced its AI framework, excluding open-source models and defining 'covered frontier models' as closed-source models with advanced capabilities.

The market is experiencing a surge in risk appetite, driven by geopolitical easing and the rebound of U.S. tech stocks. All three major U.S. stock indices rose on Tuesday, with both the Dow and S&P setting historical highs. Palantir's earnings exceeded expectations, soaring nearly 30%, becoming a focal point in the market.