Emerging market stocks and currencies rose on Friday as investors scaled back bets that the Federal Reserve will raise interest rates at its September meeting. The MSCI emerging markets stock index climbed as much as 1.1%, while the emerging market currency index gained 0.2%. This followed signals from Fed Governor Christopher Waller supporting a pause in rate hikes if inflation continues to slow. Swap contracts now reflect about a 50% chance of a 0.25% rate hike at the September 16 meeting, down from 70% earlier in the week. Investors are watching US employment data, which could determine market direction, as well as tensions between the US and Iran that might impact oil prices and shipping through the Strait of Hormuz.
Fed rate hike odds diminish, lowering expected policy rate.
Fed rate hike odds diminish, lowering yields.
