After U.S. inflation data for October came out, a Fed rate hike in December became all but certain
Core inflation is still rising: Although lower energy prices brought down the overall rate of price increases somewhat, core CPI—which excludes food and energy—has risen 0.3% for three consecutive months. This shows that inflationary pressures are spreading across the entire economy.
Officials strike a more hawkish tone: Fed Governor Waller said outright that if inflation remains this high, the Fed will have to consider a 50-basis-point hike in December. Raising rates by just 25 basis points could instead damage the Fed’s credibility. Several other Fed presidents also feel that interest rates are still fairly accommodative.
Markets bet on further hikes: In response to the latest data and comments, traders now believe a rate hike in December is a sure thing. Some are even betting on a steep 50-basis-point increase. The two-year Treasury yield posted its biggest single-day gain in more than a year.
Rate hikes could continue through 2027: Wall Street has already begun pricing this in. Analysts expect the Fed not only to raise rates in December, but possibly to hike again in the first quarter of next year. Goldman Sachs went further, saying outright that this rate-hiking cycle could continue all the way through 2027.#XAUUSD $XAU
Core inflation is still rising: Although lower energy prices brought down the overall rate of price increases somewhat, core CPI—which excludes food and energy—has risen 0.3% for three consecutive months. This shows that inflationary pressures are spreading across the entire economy.
Officials strike a more hawkish tone: Fed Governor Waller said outright that if inflation remains this high, the Fed will have to consider a 50-basis-point hike in December. Raising rates by just 25 basis points could instead damage the Fed’s credibility. Several other Fed presidents also feel that interest rates are still fairly accommodative.
Markets bet on further hikes: In response to the latest data and comments, traders now believe a rate hike in December is a sure thing. Some are even betting on a steep 50-basis-point increase. The two-year Treasury yield posted its biggest single-day gain in more than a year.
Rate hikes could continue through 2027: Wall Street has already begun pricing this in. Analysts expect the Fed not only to raise rates in December, but possibly to hike again in the first quarter of next year. Goldman Sachs went further, saying outright that this rate-hiking cycle could continue all the way through 2027.#XAUUSD $XAU
