The Federal Reserve is expected to increase interest rates at the upcoming FOMC meeting on September 16-17. Markets estimate an 86% to 92% probability of a 25 basis point hike, marking the first such move in three years. The 10-year Treasury yield has reached 5%.
Geopolitical tensions between the US and Iran have disrupted energy infrastructure. Brent crude prices have exceeded $107 per barrel, while West Texas Intermediate trades near $103. Saudi Arabia’s East-West pipeline, with a capacity of 4 to 7 million barrels per day, remains closed after drone attacks.
Gold prices dropped more than 1% to approximately $4,290 per ounce by September 14, hitting a five-week low. Analysts from Goldman Sachs and JPMorgan have updated their forecasts for the Fed's rate policy in response to rising inflation and energy costs.
Market participants are evaluating the impact of supply-driven inflation on equities. While energy stocks may gain from higher oil prices, broader market sentiment often declines during rate hikes triggered by supply shocks rather than economic growth.
