September 29 International Forex News

US-Iran Confrontation Keeps Oil Prices Elevated; Asian Bond Markets May Follow US Treasuries Lower

September 29 — Asian bond markets are expected to follow US Treasuries lower as the US-Iran confrontation keeps oil prices elevated, intensifying inflation concerns and increasing market bets on further Federal Reserve rate hikes. New Zealand government bonds opened lower, while Australian government bond futures also pointed to potential declines after US Treasury yields surged across the curve. The benchmark 10-year US Treasury yield rose by as much as 11 basis points to 5.27%, its highest level in 19 years, while the 30-year yield climbed to 5.55%. Short-term bond yields also moved higher as traders expected the Federal Reserve to continue tightening monetary policy to contain inflation. Morgan Stanley analyst Chris Larkin said: “The broader market has struggled to gain meaningful momentum amid rising yields and oil prices. With the Federal Reserve continuing to focus on the inflation side of its policy mandate, attention is likely to remain on interest rates and energy prices unless this week’s labor market data delivers a major surprise.”

Probability of a Federal Reserve Rate Hike in October Reaches 70.9%

September 29 — According to the CME FedWatch Tool, there is a 29.1% probability that the Federal Reserve will keep its target rate unchanged at 3.75%–4.00% at its October meeting and a 70.9% probability of a 25-basis-point rate hike. By December, the probability of rates remaining unchanged at 3.75%–4.00% is 5.0%, while the probabilities of cumulative increases of 25 basis points and 50 basis points are 36.3% and 58.7%, respectively.