Investors have raised their bets that the Federal Reserve will hike interest rates at its September 16 meeting, after the release of the August producer price index and a surge in West Texas Intermediate crude above $100 a barrel. The latest CME Group FedWatch Tool shows investors assigning a 70.0% probability to a 0.25% rate hike on September 16, up from 61.2% a day earlier, and a 30.0% probability that the Fed will hold rates at 3.50-3.75%, down from 38.8%. The U.S. Labor Department reported that headline PPI rose 5.4% year on year, above the 5.3% analysts expected and up from 4.8% in July, while on a monthly basis it rose 0.4%, in line with forecasts, after a 0.1% gain in July. Core PPI rose 4.6% year on year, in line with expectations, from 4.3% in July, and rose 0.2% month on month, below the 0.3% forecast, from 0.3% in July. Meanwhile, Brent crude surged past $105 a barrel amid tensions between the United States and Iran. Dan Struyven, head of global commodities research at Goldman Sachs, said the conflict, now in its seventh month, is raising the risk that oil prices could climb above $120 a barrel as Iran intensifies attacks on ships in the Strait of Hormuz.
CME Group IncCME Group's FedWatch Tool is cited as the gauge showing rate-hike odds jumping to 70%, boosting usage of its derivatives/rate products.
Goldman Sachs Group IncGoldman Sachs commodities research head Dan Struyven is quoted warning oil could top $120 on Iran tensions; no direct impact on Goldman itself.
