Investors are taking Federal Reserve Chair Jerome Powell at his word, and they aren’t letting the worsening violence in the Middle East or the widespread strike at the nation’s ports change their views about interest rates.
The market is pricing in a 63% chance of a quarter-point rate cut from the Fed in November after the jumbo half-point move last month. A week ago, a half-point cut in November was seen as more likely. That was before Powell gave a speech Friday saying he’s in no rush to cut and that the Fed prefers smaller increments.
Iran’s rocket attack on Israel yesterday could have implications for rates by driving up energy costs, and thereby inflation. The strike by dock workers could also be inflationary by jamming supply chains.