With inflation pressures mounting and the economy showing strength, the Federal Reserve is increasingly likely to move ahead with another rate hike just before the midterm elections. The preliminary September reading of the S&P Global US Composite Purchasing Managers' Index, released on the 23rd, rose to 58.4 from 56.0 the previous month, the highest level since July 2021. Crude oil prices also climbed, pushing the average price of diesel fuel above $6.50 a gallon. Fed Governor Barr said on the 23rd that the rate increase decided at last week's Federal Open Market Committee meeting marked an important step toward "recalibrating" interest rates to curb inflation, and that further hikes are likely to be needed. Short-term interest rate futures markets are pricing in roughly a 70 percent probability of an additional rate hike at the FOMC meeting on October 27-28, with the midterm elections to be held just days later, on November 3.
Article states the Fed is increasingly likely to hike rates again at the Oct 27-28 FOMC meeting, pushing the effective fed funds rate higher.
Rising rate-hike odds and mounting inflation pressures push the 10-year Treasury yield higher (bond price lower).
