Fed inflation focus lifts September rate-hike odds, with markets split

  • U.S. August nonfarm payrolls headline a data-heavy week testing September Fed hike expectations.
  • Deutsche Bank forecasts 65,000 jobs and Wells Fargo 80,000 after July’s 23,000 drop.
  • Deutsche Bank says a September 16 Fed rate hike remains the most likely outcome.

Investors face a pivotal week for the global economic trajectory, headlined by the U.S. August nonfarm payrolls report and key indicators across major economies, as markets assess whether central banks will advance monetary tightening while inflation stays persistent and labor-market momentum slows. After Federal Reserve Chair Kevin Warsh’s Jackson Hole emphasis that inflation remains above the 2% target and that prices should be the Fed’s predominant focus, Deutsche Bank said a rate hike is the most likely outcome at the Sept. 16 FOMC meeting. Market measures of September odds still differ, with CME FedWatch earlier showing 55.7% odds of a hike and Fortune-reported prediction markets at 44.5%, while the two-year Treasury yield had risen to 4.31%. Economists expect August payrolls to rebound by about 65,000 to 80,000 after a 23,000 decline in July, with unemployment near 4.1%–4.2% and average hourly earnings up 0.3%–0.4% on the month. The U.S. docket also includes ISM surveys, JOLTS, ADP payrolls, the Beige Book and remarks from Fed Governor Christopher Waller. Abroad, eurozone August inflation is projected at 3.3%–3.4%, supporting expectations for a European Central Bank September hike, the Bank of Canada is seen holding at 2.25%, and second-quarter GDP updates are due from India, Australia and Brazil.

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