Markets shift to price a Fed pause after cooler August PCE
On 30 September 2026 markets reduced the probability of an October Fed rate hike after August PCE inflation printed 3.4% year/year (core 3.0%), prompting traders to push the next likely lift toward December and to price a lower chance of an October move.
The desk brief
On 30 September 2026 markets reduced the probability of an October Fed rate hike after August PCE inflation printed 3.4% year/year (core 3.0%), prompting traders to push the next likely lift toward December and to price a lower chance of an October move.
A reduced near-term hiking probability eases immediate USD funding and policy-rate risk, which can lower short-end US Treasury pressure and short-term dollar funding strains. However, with long US yields still elevated, refinancing premia for long-duration African USD borrowers (sovereigns and corporates) may remain wide, sustaining higher borrowing costs at long maturities.
Federal Reserve November/December rate expectations as of the Oct 27-28 FOMC meeting and the October US CPI and jobs reports.
Sources & verification
Developing storyFurther independent confirmation is required.
- A cooler-than-expected reading on Fed’s favored inflation measure tamps down on urgency for rate hikesyahoo.comSource published (opens in a new tab)
- Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expectedcnbc.comSource published (opens in a new tab)
Public references supporting this brief.