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Fed July Rate Hold Probability at 65.8%, September Hike Expectations Rise

美联储

According to the CME "FedWatch" on June 25th, the probability of the Federal Reserve keeping interest rates unchanged in July is 65.8%, while the probability of a cumulative increase of 25 basis points is 34.2%. The probability of the Federal Reserve maintaining interest rates unchanged until September is 33.6%, the probability of a cumulative increase of 25 basis points is 49.7%, and the probability of a cumulative increase of 50 basis points is 16.7%. (Wide Angle Observation)

The probability of the Federal Reserve maintaining interest rates unchanged in July is 65.8%

In May, the U.S. PCE inflation data reached a three-year high, with core PCE rising to 3.4% year-on-year, indicating persistent inflationary pressures. Although the Federal Reserve is highly likely to keep interest rates unchanged in July, the rebound in core inflation has increased the probability of future rate hikes. Officials predict that there may be one rate hike within the year, with the goal still being to reduce inflation to 2%

PCE Report: The Federal Reserve's preferred inflation indicator hits a three-year high, increasing the likelihood of interest rate hikes

In May, the U.S. PCE inflation data was released, with both overall and core PCE rising year-on-year beyond expectations, reaching recent highs. The short-term surge was mainly driven by rising oil prices due to geopolitical conflicts, but as energy prices have retreated, the market believes that overall PCE has peaked. However, service inflation remains stubbornly sticky, with downward economic pressure coexisting with inflation resilience, leading to a significant decrease in market expectations for a Federal Reserve rate hike in July and an increase in recession risks

Recession risks are rising! PCE may have peaked, and expectations for the dollar and interest rates are turning

Longfor, China Resources Land and other real estate stocks fell, affected by uncertainties in the US-Iran negotiations and rising expectations of interest rate hikes by the Federal Reserve. In May, the decline in real estate investment in mainland China widened, and residential prices dropped. The Hang Seng Index fell by 1.7%, and the Hang Seng China Enterprises Index dropped by 1.9%. The swap market indicates that the probability of a rate hike in September has risen to about 90%

"Stocks in Motion" Longfor Group falls over 7%, China Resources Land drops by half, unclear US-Iran negotiations raise interest rate expectations again

Driven by rising expectations of interest rate hikes from the Federal Reserve and risk aversion sentiment, the US Dollar Index has strongly broken through the key resistance level of 101.20, reaching a new 13-month high. The market generally expects the Federal Reserve to raise interest rates by 25 basis points to 4.00% by the end of 2026, with rising US Treasury yields further supporting the dollar. If it effectively breaks through the neckline, subsequent targets will look towards 102.80 and 104.50

US Dollar Index Analysis: Rising Interest Rate Expectations and Multiple Positive Factors Drive Strong Surge in the US Dollar Index

Affected by the rising expectations of the Federal Reserve's interest rate hikes and the increase in the US dollar index, international gold and silver prices are under pressure and have declined. The August futures for New York gold fell by 1.27% to $4,149.40 per ounce, while the July futures for silver dropped by 5.36% to $62.070 per ounce. Deutsche Bank has lowered its gold price forecast; if the Federal Reserve maintains interest rates, the target price for Q3 is $4,300; if there are 3-4 rate hikes, gold prices may fall to $3,800

International gold, down! Silver, plummeting

In May, the core PCE in the United States rose by 3.4% year-on-year, reaching a nearly three-year high, while the overall PCE increased by 4.1% year-on-year. The war in Iran has driven up energy prices, intensifying inflationary pressures, and the market has strengthened expectations for a Federal Reserve interest rate hike in September, although the probability has slightly decreased. Following the data release, U.S. stock futures rose, the dollar strengthened, and U.S. Treasury yields fell slightly

U.S. inflation "explodes"! Core PCE hits a nearly three-year high, and the Federal Reserve's rate hike expectations for September rise again

The real estate sector is under pressure, with stock prices of SINO LAND, HENDERSON LAND, and NEW WORLD DEV declining. The US-Iran talks have introduced variables, with Trump warning Iran not to close the Strait of Hormuz. Market expectations for interest rate hikes are heating up, with interest rate futures indicating a significant increase in the probability of a Federal Reserve rate hike in September

"Stocks in Motion" SINO LAND fell 5% while HENDERSON LAND dropped 2%, as the US-Iran talks face uncertainties and interest rate hike expectations rise

Affected by the Federal Reserve's hawkish signals and rising interest rate expectations, the non-ferrous metal ETF ChinaAMC (516650) has corrected over 5%. Despite the pressure on the sector, institutions such as Zhongtai and Dongguan Securities are optimistic about the copper market's mid-term "weak supply and strong demand" pattern, believing that supply disruptions and demand support from AI and the power grid will maintain a tight supply-demand balance. They also recommend allocating to low-volatility dividend ETFs to balance risk

As expectations for interest rate hikes by the Federal Reserve rise, the non-ferrous metal ETF ChinaAMC has corrected over 5%, with institutions optimistic about the copper market's "weak supply and strong demand" mid-term pattern

Fed July Rate Hold Probability at 65.8%, September Hike Expectations Rise

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