Overview
- U.S. personal consumption expenditures data ran cooler than traders expected, which weakened the dollar and prompted markets to scale back the chance of a near-term rate increase.
- New York Fed President John Williams had already signaled there was no urgency for an October hike, comments that earlier this week helped push implied odds of an October move sharply lower.
- The CME FedWatch Tool showed the market-implied probability of an October rate increase falling to about 42.6% from roughly 70% earlier in the week.
- Spot gold rose modestly on the day while futures jumped after U.S. Treasury yields retreated from recent multiyear highs, but spot gold remains on track for about a 6% decline over the month.
- Traders are still watching Doha-mediated U.S.–Iran talks and the Strait of Hormuz for any oil-supply risks that could lift energy prices, keep inflation higher, and force the Fed to reconsider further tightening.