Federal Reserve Rate Hike Predictions Shift Amid Economic Data Concerns
The Federal Reserve's stance on interest rates has undergone a shift in response to recent economic data and inflation concerns. According to John Velis at BNY Markets, the probability of a rate hike in September has decreased from over 70% to around 50-50 as of now.
This change is largely attributed to last week's weak US jobs report, which has trimmed tightening priced along the curve. However, the upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) releases remain crucial for the Fed's rate deliberations.
Velis reiterates that he expects no Federal Reserve rate hikes this year, despite acknowledging the risk of an upside surprise. The market has also adjusted its expectations further out the curve, with the number of expected hikes by next July decreasing to below 1.8.