Global Markets

This month and especially the current week, have been intense in terms of central bank activity, with historic rate hikes to contain inflation, in spite of rising fears of recession

The Federal Reserve delivered another historic 75 basis points rate increase and upgraded its forecast, seeing rates as high as 4.4% by the end of the year

Last week's CPI numbers showed resilient inflation. This surprised markets and introduced 100bps as an option for the Fed. Join FXCM Market Specialists Russ and Nik as they discuss this, the new terminal rate, and the chances of the Fed overshooting. The two specialists also examine the yield inversion and discuss the BoJ's monetary policy. Please join us for these and more.

The US 02-yr Treasury note jumped today, trading at levels last seen in November 2007. It's trading near 3.85%, reflecting market expectations of at least a 75bps hike next week. Some participants have discussed a 100bps increase, reflecting as a 26% probability presently.

Core CPI accelerated in August as yesterday’s report showed, just a week ahead of the Fed’s upcoming policy meeting, which may put pressure for an even larger move on interest rates

The Australian central bank hiked rates by another 0.5% on Tuesday and pointed towards further increases ahead, but maintained optionality as to the future moves

The US economy created 315K jobs in August. This number was better than the forecast of 295K but less than last month's print of 526K. The unemployment rate increased from 3.5% to 3.7%. Moreover, the participation rate increased by 30 bps to 62.4%. Average hourly earnings rose slower: 03% vs last month's 0.5%. Thus there is evidence of some moderation in the labour market. This is ever so slight, but…

Fed chair Powell's speech led to a risk-off environment, as he outlined inflation as the primary policy driver. However, the Fed was not the only hawkish central bank, with tightening comments from the ECB. Moreover, the ECB minutes seemed to downplay a recession. This prompts Russ and Nik to discuss a general and potential contrarian overshoot scenario. NFP on Friday has forecasts between 285-295K, and Euro PMIs print on Thursday.

Fed chair delivers on hawkish expectation at Jackson Hole.