The likelihood of a Fed interest rate hike next week just got a lot higher — SkimNews
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- CME Group's FedWatch gauge showed traders pricing a 70% chance of a Fed rate hike next week after August PPI rose 0.4%, pushing the annual rate to 5.4%.
- U.S. crude oil prices jumped 4% past $100 a barrel as intensified Middle East hostilities spooked commodities traders.
- The European Central Bank announced a quarter-point rate hike and raised its inflation forecast, citing deeper economic impacts from the Iran war.
- Bank of America's Stephen Juneau estimated core PCE is tracking at a 0.26% monthly pace (rounding to 0.3%), saying it should "greenlight a hike" — BofA expects three hikes total, out of consensus.
- Traders also nudged odds of a second December increase to close to 60%.
- The Bureau of Labor Statistics releases its August CPI report Friday, with Dow Jones consensus expecting headline annual of 3.4% and core of 2.4%.
Why it matters: A confirmed hike next week would raise borrowing costs for consumers and businesses already absorbing a 4% crude oil surge past $100. Bank of America's three-hike call puts it well ahead of the roughly one-and-a-half moves currently priced by futures, meaning even a hawkish Fed decision could underdeliver versus the most aggressive Wall Street forecast.
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