Brent Crude topped $100 per barrel for the first time since July and WTI Crude also exceeded $100 a barrel this week, sharply raising the odds of a Fed interest rate hike next week and re-launching the recession conversation for the first time since the early weeks of the Iran war. The CME FedWatch gauge showed traders putting the chances of a 0.25-basis point hike at next week's Fed meeting at 72.4% as of September 10, up from 49.4% a week earlier. Goldman Sachs Chief Economist Jan Hatzius told Yahoo Finance the bank has scaled back its 12-month recession risk estimate to 15% from about 30% in March, but would raise it again if another shock hits, and said its roughly 1.5% second-half GDP growth projection does not build in another major shock. Diesel, the main fuel of the economy, has just hit a $6 per gallon average in the United States for the first time ever, after breaking the all-time record of $5.85 last week, while U.S. gasoline prices are at a record high for this time of year. The cushions that kept the oil market subdued since March have largely vanished: U.S. crude stocks in the strategic reserve are at their lowest level since the early 1980s, China has eased restrictions on fuel exports and returned to buying more crude with imports rebounding from the decade-low seen in June, and crude flows from the Strait of Hormuz have recovered to an estimated half to two-thirds of pre-war levels while fuel supply remains severely limited.
Goldman Sachs Group IncGoldman's Hatzius discusses recession risk and GDP outlook amid oil-driven Fed hike odds, but no company-specific development.
