Oil prices approach the $100 mark, probability of Federal Reserve rate hike surges, market reanchors hawkish expectations
智通财经2026/07/23 13:26- The market's pricing of the probability of a Federal Reserve rate hike in July has increased significantly, currently approaching 40%. Just a week ago, this proportion was only about 10%. At the same time, the September meeting is almost fully priced for continued tightening.
- Although recent CPI and PPI data have fallen short of expectations, this narrative is gradually losing credibility due to energy prices having risen by roughly 30% over the past three weeks, continuously undermining the reliability of slowing inflation.
- The market's focus is shifting from previous soft data to a renewed assessment of forward-looking price pressures, especially as crude oil is again approaching the $100 mark, deepening concerns about persistent inflation.
- Under the new chair Walsh, the Federal Reserve's stance displays a slightly hawkish tilt, emphasizing the re-anchoring of market confidence in inflation management, making the likelihood of a surprise dovish outcome at the upcoming meeting relatively low.
- Even if the Federal Reserve ultimately chooses to remain on hold, in the short term, the market structure still tends to price in a hawkish outcome, which supports a stronger U.S. dollar and rising U.S. Treasury yields. This tendency will be even more pronounced if energy prices continue to climb.
- At the psychological level of trading, the market is correcting from previous excessive optimism, once again factoring in risks of sticky inflation and ongoing policy tightening. The future trend will be highly dependent on the mutual validation between next week's energy prices and statements from Federal Reserve officials.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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