Markets faced three macro pressures on July 24 as Brent crude touched $100, the 10-year U.S. Treasury yield moved above 4.7%, and the U.S. Dollar Index climbed back above 101. According to BlockBeats, the combination is feeding expectations for tighter financial conditions ahead of the Federal Reserve’s next policy decision. Higher oil prices are lifting inflation expectations, rising Treasury yields are weighing on equity valuations, and a stronger dollar is tightening global liquidity.
CME FedWatch data showed the probability of a 25-basis-point rate increase in July at 37.9%, while the odds of rates staying unchanged stood at 62.1%. The probability of a rate cut was zero. The Federal Reserve is scheduled to announce its interest-rate decision at 02:00 Beijing time on Thursday, July 30.
Markets were hit by three macro pressures on July 24, with Brent crude touching $100, the 10-year U.S. Treasury yield rising above 4.7%, and the U.S. Dollar Index moving back above 101, according to BlockBeats.
Each move points to a different source of pressure. Higher oil prices are lifting inflation expectations. Rising Treasury yields are weighing on stock valuations. A stronger dollar is tightening global liquidity.
Fed rate-hike pricing moves higher ahead of next week’s meeting
At the same time, market pricing for a rate increase at next week’s Federal Reserve meeting moved up again. CME FedWatch data showed a 37.9% probability of a 25-basis-point hike in July, while the probability of no change stood at 62.1%. The chance of a rate cut was zero.
The Federal Reserve is set to release its interest-rate decision at 02:00 Beijing time on Thursday, July 30.
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