Strong US Economy Keeps Another Interest Rate Hike in Focus

The strong growth in the US economy has put another interest rate hike by the Federal Reserve (Fed) firmly back on the table. The September flash composite PMI rose to 58.4, its highest level since July 2021, indicating a sharp increase in business activity.

However, the durable goods orders report for August showed virtually no growth, creating some uncertainty about the Fed's next move.

The median policy rate forecast by the Fed stands at 4.1% at year-end, suggesting one more quarter-point increase if the current outlook holds. The 10-year Treasury yield remains above 5%, which could increase the risk of another rally to 6% if sustained.