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Investors Eye Geopolitical Tensions as the Fed Raises Rates
History says the September 16 hike isn't necessarily bearish - the S&P 500 rose in four of six tightening phases since 1994, and the Nasdaq 100 in five - with Gulf supply risks and the Trump-Xi summit the key channels to watch.
The Federal Reserve's September 16 rate hike is not necessarily bearish for equities. Across six completed tightening phases since 1994, the S&P 500 finished higher four times, while the Nasdaq 100 rose in five. The Russell 2000 ranged from a 7.5% loss in 1994-1995 to a 21.5% gain in 2004-2006. While tighter policy direction may put pressure on valuations, earnings growth and a strong macroeconomic backdrop can carry markets higher. In addition to monitoring monetary policy, we're also tracking two geopolitical channels. Gulf supply disruptions keep headline inflation in focus, while the September 24 Trump-Xi summit puts tariffs and technology restrictions back in play.
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Investors Await Critical CPI Report After Hot Jobs Report
A stronger-than-expected August payrolls print (162,000 vs. 53,000 est.) undercut the labor-softness case, trimming September hike odds to 55.7% from 64.3%, with Thursday's PPI, Friday's CPI, Apple's keynote and Oracle's results the next inputs for the rate outlook.
All Eyes Turn to The Labor Market after Hawkish Jackson Hole Keynote
Warsh's Jackson Hole debut kept rate hikes on the table, sending September odds to 64% and the 10-year to 4.76% — but the move stayed in rates as equities held firm, with August jobs (Sept 4) and CPI (Sept 11) now set to decide the meeting.
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