Overview
- Markets now put roughly an 85–90% probability on a 25 basis-point Fed hike at the September 15–16 meeting, according to futures and the CME FedWatch tool.
- U.S. inflation readings showed core CPI rose 0.3% in August, and hotter-than-expected PPI and payroll data reinforced concern that underlying price pressures remain persistent.
- Renewed attacks on Middle East energy infrastructure and reduced Gulf exports have driven Brent and WTI above $100 a barrel, increasing the risk that energy costs will feed into broader inflation.
- Short- and long-term Treasury yields have climbed toward multi-year highs—two-year yields in the mid-4% range and the 10-year near 5%—and major banks including Goldman Sachs and J.P. Morgan have flipped to forecasting a September hike.
- The Fed’s decision and its post-meeting guidance will shape whether markets view a hike as one-time insurance or the start of a tightening sequence, with implications for borrowing costs, equity valuations, and the term premium.