On September 10, Brent crude surged more than 6%, briefly topping $108 a barrel. The U.S. 10-year Treasury yield approached 4.95%, adding pressure to borrowing costs and stock valuations.
August producer inflation reached 5.4% annually, up from 4.8% in July. The monthly increase was 0.4%, matching expectations. Traders priced roughly a 70% chance of a Fed hike next week. A hike is still unconfirmed.
Stocks already reacted: the S&P 500 fell 0.58%, while the Nasdaq lost 0.65%. The S&P has dropped around 2% across four sessions.
My view: expensive oil adds inflation pressure, while higher yields reduce the appeal of risky assets. This creates a difficult backdrop for stocks and crypto, although energy producers often benefit from higher oil prices.
But known risks do not guarantee another selloff. Softer inflation or fewer future hikes than expected would support a relief rally. Hotter inflation and a more aggressive Fed would increase downside pressure.
For September, watch how inflation and Fed guidance compare with expectations. An expected hike alone does not decide the market’s next direction.
DYOR 