Markets Price in High Probability of Fed Rate Hike Amid Strong August Core Inflation

Financial markets are pricing in an approximately 87% chance of a 25 basis point interest rate hike by the US Federal Reserve this week. This expectation follows stronger-than-expected August core inflation data, which rose 0.3% month-on-month. The US 10-year Treasury yield tested its highest level since October 2023 at 4.98% and stabilized at 4.97% in response.