Markets now price a 75% chance of a 25bps Fed rate increase to 3.75-4.00% by year-end, bolstering the Dollar.
The US Dollar strengthened as markets priced in a 75% probability of a 25bps Federal Reserve rate hike to 3.75-4.00% by year-end. Labor market stability and rising inflation, supported by ISM surveys and the Fed Beige Book, underpinned the shift in expectations.
Recent data showed employment growth stalling in most Fed districts, while price increases accelerated. The ISM Prices Paid index signaled persistent inflation risks, reinforcing concerns about upside pressures. Dallas Fed President Lorie Logan indicated higher rates may be needed to curb inflation.
The Fed Beige Book highlighted modest employment changes and stronger price growth, aligning with ISM findings. Traders are closely watching upcoming Revelio Labs employment data for further confirmation of labor market trends.