Markets are entering a key macro week with rate decisions due from the Federal Reserve, the Bank of England and the Bank of Japan, as oil prices return to $100 and inflation expectations rise. U.S. August PPI climbed 5.4% year over year, above the 5.3% forecast, while CPI held at 3.4% and core CPI rose 0.3% month over month, topping expectations of 0.2%.
Interest rate swaps lifted the implied probability of a Fed rate hike next week to about 90%, up from 69% before the data. Markets have fully priced in two rate hikes before year-end. U.S. stocks retreated for the week, with the Dow down 1.57%, the S&P 500 down 0.8% and the Nasdaq down 0.66%, though all three indexes gained about 1% on Friday after the CPI release.
Key events next week include the Fed decision and economic projections on Thursday at 02:00 Beijing time, Fed Chair Waller’s policy press conference at 02:30, the Bank of England decision at 19:00 Thursday and the Bank of Japan decision at 11:00 Friday. U.S. retail sales, eurozone CPI, jobless claims, housing starts and industrial production are also scheduled.
Fed Rate Hike Odds Near 90% as Major Central Banks Prepare Decisions
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