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Markets:
WTI crude oil down -1.59% to $85.45Gold down -1.52% to $4,075NZD leads, JPY lagsS&P 500 up +0.07% to 7579.25US 10y Treasury yield up 1 bps to 4.892%Bitcoin down -0.86% to $74,299
It would have been a relatively quiet session if it wasn’t for Waller’s hawkish remarks. In a drastic change of heart, Waller floated the idea of a 50 bps hike in December if the Core CPI M/M came in at 0.3% or higher today. Moreover, he said that a 25 bps hike would be warranted even if inflation in October proved to be better than in September.
Keep in mind that Waller is a very influential governor and has been a leading indicator for Fed’s policy since 2021. He’s been willing to give disinflation a chance back in September but has now completely changed his mind. The probabilities for a December hike jumped to 99% following Waller’s comments, and a hot CPI today could raise the probabilities for a 50 bps hike.
On the US-Iran front, we haven’t got any fresh development after yesterday’s positive headlines. As a reminder, it was reported that meetings between Trump, Vance and the Qatari PM were positive, and they discussed ways to progress talks with Iran. Trump said after talks with the Qatari PM that Qatar would rather see a peaceful solution with Iran, but the US is ready for strikes if necessary.
Moreover, it was reported that the US has allowed a small uranium enrichment inside Iran, which Tehran agreed to, and preliminary agreement on reducing uranium enrichment is likely. A concrete breakthrough hasn’t been achieved yet, so the longer the stalemate drags on, the higher the probability that oil prices rise again.
This article was written by Giuseppe Dellamotta at investinglive.com.