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Oil worries and softer US jobs data keep Fed-cut hopes in check
CME FedWatch now points to nearly a 44.0% chance of a 25 basis point rate hike in September, down from 67.0% a week earlier.
US stock futures were mixed in European trading on Monday, with Dow Jones futures steady near 54,150, S&P 500 futures up 0.16% to about 7,790, and Nasdaq 100 futures up 0.39% to around 29,950, as investors weighed rising crude prices and broader policy uncertainty.
FXStreet reports that crude moved higher on fading hopes for an agreement to reopen the Strait of Hormuz, while Middle East tensions linked to the US-Iran conflict remained elevated. The backdrop is also influencing the market’s inflation and interest rate outlook, with traders turning attention to upcoming US inflation data.
The focus on the Fed sharpened after US Nonfarm Payrolls fell by 23,000 in July, alongside downward revisions to June, which dropped from an initially reported 57,000 to 20,000. The CME FedWatch Tool showed expectations for a September 25 basis point hike falling to nearly 44.0% from 67.0% a week earlier.
FXStreet also notes that Societe Generale’s Kenneth Broux said the data materially changed the policy debate, with one hike still seen as possible for December even as the labor market softening prompts investors to reassess the timing of any further Fed tightening and the balance of the central bank’s dual mandate.
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