Markets:
Oil rose for the 11th day in the past 12 and unsurprisingly, it pushed up yields and weighed on risk assets. The market has now moved to price in a 92% chance of a hike tomorrow from the Federal Reserve and has fully priced in another cut before year end. The question now for Warsh is how hawkish will he sounds. Pushing up the front end may help him establish credibility on the long end but he also likes strategic ambiguity and that could ultimately read as dovish. In any case, he will find himself in a tricky position on Wednesday afternoon in Washington.
In terms of oil, it was sliding early in New York trading but then Libya announced field closures due to protests. That was quickly followed by Saudi Arabia suspending loadings at its lone Red Sea port in light of the pipeline attacks. There are some rumors in the market that Saudis told customers not to expect oil until November. In terms of moves towards peace, there was nothing credible but oil did come slightly off the highs in the afternoon but late reports of explosions in Saudi Arabia and airport closures lifted prices again.
The dollar was generally bid and Bessent's comments on the yen suggest limited ammunition to intervene further. The Fed is obviously a big consideration in the dollar trade as well.
Tomorrow's decision hits at a vulnerable time for AI with calls for a slowdown. At the same time, we've seen some remarkable resilience in stock markets this year even as we went from pricing in Fed cuts to 97 bps of hikes in the year ahead. That's the state of play going into the big decision.
Late in the day the crypto-regulating CLARITY Act failed in the Senate and that led to a slump in bitcoin and altcoins.
This article was written by Adam Button at investinglive.com.
Source: Investing Live - News
