Fed becomes less hawkish, but inflation threatens to pick up | MarketTalk: What’s up today? | Swissquote

Show notes

Flight to safety continued on Wednesday, as Middle East tensions rose by another notch after Iran-backed Hezbollah said it fired missiles to an Israeli military post near the Lebanese border. US Treasuries, gold and Swiss franc gained.
The easing US yields and the dollar’s depreciation are due to mounting tensions in the Mid East, but they are also due to a recent softening in Federal Reserve (Fed) speakers’ policy approach.
The probability of a no rate hike in November jumped above 90% after the Fed minutes, whereas this probability stood at around the 70% level at the beginning of this week. US fed funds futures price in more than 70% for a no hike in December as well, whereas this probability closer to 50/50 a few days ago.
But, but, but… revealed yesterday, the producer price inflation in the US came in higher than expected. And due today, the US CPI data could, or could not show a further fall in headline and core inflation. A higher-than-expected set of inflation data could scale back a part of the recent dovishness regarding the Fed and reverse a part of the recent gains in US Treasuries.
Listen to find out more!