Oil Above US$100 and Fed Hike Odds Frame Week | Global Economy, Oct 12
Oil above $100 keeps inflation fears alive. Polymarket puts a December Fed hike at 74.5% before Wednesday's US inflation data. The post Oil Above US$100 and Fed Hike Odds Frame Week | Global Economy, Oct 12 appeared first on The Rio Times .
As oil surpasses $100 a barrel, this week's inflation numbers take on a new urgency as a global endurance test. The Houthi attacks on Saudi Arabian oil facilities have caused Brent crude to soar to $105 a barrel, reigniting worries that energy costs may prevent central banks from lowering interest rates anytime soon. While the Federal Reserve is the focus, Polymarket traders currently see just a 16.5% chance of a rate change at their next meeting on October 28th, with a 74.5% chance of a quarter-point increase in December.
This indicates that market participants believe the inflation issue is far from resolved, and the bond market believes US yields will remain near recent highs to curb price pressures. With Wednesday's US consumer-price report for September expected to provide the main inflation signal, a stronger-than-expected report could push the 10-year Treasury yield back towards the 5.3% mark and trigger a sell-off in stocks.
Conversely, a weaker reading would offer a respite for investors already braced for higher rates. However, the real test for the global economy will come on Wednesday when the US releases its September consumer-price index—the key gauge of inflation that will determine whether the Federal Reserve hikes borrowing costs again before the end of the year.
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