Rate Hike Odds Rise to 60% as US Payrolls Surprise

US Federal Reserve rate expectations have been pushed back toward 60% following strong August payrolls data, according to BNY. The data release last week saw nonfarm payrolls come in at 162,000 versus an expected 55,000.

This has left rate expectations highly dependent on upcoming inflation data, with the Consumer Price Index (CPI) taking center stage this week.

CPI is a key indicator of inflation and will be pivotal in determining whether markets reinforce or unwind renewed tightening expectations. A firm print across both CPI measures would likely reinforce the case for a September hike and could extend the recent backup in short-end rates.