Rate Risk Creeps Back into Market as Fed Hike Odds Soar

The current equity bull market is facing concerns that the economy may be on the cusp of a downturn or that the Federal Reserve will tighten monetary policy until something breaks.

This is according to an old Wall Street rule, which states that bull markets typically end when either the economy slows down or the Fed increases interest rates significantly.

As of now, neither scenario appears imminent, but rate risk is creeping back into the market. On Thursday, Brent crude oil prices spiked above $105 per barrel, and US producer prices rose by the most in three months.

The data points to a potential shift in the economic landscape, which could have implications for investors. The Fed funds futures are currently pricing in around a 71% chance of a quarter-point hike next week.