Quick Read – A hotter-than-expected Aug. 12 CPI print could push Kevin Warsh to support a September rate hike at the FOMC’s Sept. 15-16 meeting. – Oil prices surged roughly 21% in July after Iran-related conflict disrupted energy markets, threatening to lift consumer inflation…
oadly. – Long-term inflation swaps still imply 2.4% average inflation, and 30-year Treasury yields hover near 20-year highs, signaling persistent market concern. – For much of this year, investors have focused on when the Federal Reserve would finally begin easing monetary policy. That narrative has shifted
Rising oil prices, stubborn inflation, and Treasury yields hovering near their highest levels in almost 20 years have forced markets to reconsider whether the Fed’s next move might actually be another rate increase. The next major test comes on Aug. 12, when the U.S. Bureau of Labor Statistics releases July’s Consumer Price Index (CPI).
If inflation surprises to the upside, it could strengthen the case for Federal Reserve chair Kevin Warsh to support a rate hike at September’s Federal Open Market Committee (FOMC) meeting. Inflation Data Is About to Take Center Stage According to a Financial Times report citing people familiar with Warsh’s thinking, the Fed chair remains open to raising interest rates in September if inflation data over the coming weeks runs hotter than expected and financial markets begin pricing in higher borrowing costs. Granted, the report is based on unnamed sources rather than comments from Warsh himself, so investors should treat it cautiously.