Summary

CME FedWatch data indicates an 85.6% probability that the Fed will hold rates in July, while the likelihood of a 25bps hike in September has risen to 53.5% 观点网+ 2. This shift is driven by persistent inflation in services like healthcare and finance, alongside rising oil prices due to geopolitical tensions in the Middle East 观点网+ 3.

Impact Analysis

So, the market is basically admitting that July is a ‘skip,’ not a ‘pause.’ By keeping the September hike probability above 50%, the Fed is successfully preventing financial conditions from easing too early. What’s interesting here is the catalyst shift—it’s no longer just about sticky CPI; we’re seeing inflation pressure bleed into healthcare and finance while oil prices spike due to the Iran port blockade 观点网+ 2. This ‘higher for longer’ narrative is finally gaining teeth, evidenced by the 2-year yield holding above 4.25% and gold coming under pressure 观点网+ 2. The dot plot is the real kicker: most officials still see at least one more hike this year 观点网. Bottom line—don’t get lured into a ‘pivot’ rally. The smart play is staying long USD and potentially shorting gold on rallies, as the cumulative probability of a hike by December is now nearly 80% . The market is finally waking up to the fact that the inflation fight is far from over.