$TRUMP Breaking: Fed Chair’s elusive remarks prompt the market to reprice the rate outlook..
Surprise
The probability of a rate hike in October fell below 14% after Fed Chair Kevin Warsh’s remarks, while the probability of holding rates steady rose to around 86% on Investing.com’s Fed rate tracker and 85.1% according to CME FedWatch, despite inflation reaching 3.7% and PPI 6.3%. Warsh did not announce a “pause”; rather, he refused to hint at the Fed’s direction. But the market interpreted the absence of a hawkish signal, along with employment and yield data, as pointing to rates being held steady. A December hike remains almost fully priced in at around 88.9%.
$XAU
Surprise
The probability of a rate hike in October fell below 14% after Fed Chair Kevin Warsh’s remarks, while the probability of holding rates steady rose to around 86% on Investing.com’s Fed rate tracker and 85.1% according to CME FedWatch, despite inflation reaching 3.7% and PPI 6.3%. Warsh did not announce a “pause”; rather, he refused to hint at the Fed’s direction. But the market interpreted the absence of a hawkish signal, along with employment and yield data, as pointing to rates being held steady. A December hike remains almost fully priced in at around 88.9%.
$XAU