The Federal Reserve maintained the federal funds rate at 3.75%-4.00% following a 25 basis point increase on Wednesday, with the vote recorded as unanimous. According to reports from Investing.com India, Fed Chair Kevin Warsh cited stronger growth, insufficient progress on inflation, and rising geopolitical risk as key factors supporting the decision. The Fed's updated projections indicate inflation may not return fully to target until 2029, while growth and employment forecasts showed improvement. Global bond yields eased slightly following the announcement, with markets now focusing on this week's key meetings including the Trump-Xi summit. The median policy-rate projection was revised up to 4.1% for end-2026, consistent with another 25-bps hike this year, while 16 of 18 policymakers expect at least one further increase. However, the decision has created high volatility in global commodity markets, particularly affecting industrial metals.
Fed funds futures now imply 3.1 rate increases over the next 12 months and 1.8 over the next six months. As reported by Investing.com India, the odds of an October hike stand at approximately 58% against 42% for a hold, with odds of hikes at both October and December meetings at 44%. Nine Fed officials are scheduled to speak this week, including Goolsbee, Williams, Jefferson, Barkin, Barr, Hammack, Paulson, Bowman, and Schmid. Kansas City Fed President Jeffrey Schmid supported the recent hike, describing elevated inflation as reflecting more than just oil prices and noting a balanced labor market and solid growth. Markets are assigning around a 58% probability to another hike at the October meeting, with the decision creating significant pressure on global commodity markets including metals.
The Fed's decision has created high volatility in global commodity markets, with major metals such as Copper, Aluminium, Zinc, and Tin remaining in high trading ranges despite structural demand from modern industries. According to SO OK TRADING, these metals are supported by historically low stock levels, while Gold and Silver continue to move within narrow bands under the weight of interest rate expectations and dollar strength. The strengthening U.S. dollar directly impacts global commodity prices, with the Dollar Index moving above 100 adding pressure to international trade. This week's industrial and precious metals markets are entering a phase of high volatility, driven by macroeconomic pressures from the anticipated Fed rate hike and dollar strength.
Initial jobless claims for the week ended September 18 are expected to follow last week's 196,000 reading, the lowest since July and breaking five consecutive weeks above 200,000. According to Investing.com India, continuing claims eased to 1,730,000 for the week ended September 4, with the four-week average at 1,774,000. The 2-year Treasury yield climbed to 4.75% by Friday's close, up from 4.67% the previous day, remaining well above the federal funds rate. Markets are now positioning cautiously ahead of this week's key meetings, with the Trump-Xi summit expected to provide significant directional cues. The 10Y G-sec yield closed at 7.07%, up 4.5 bps over the week.
The Federal Reserve banks of Richmond and Kansas City will release their districts' September business surveys this week. As reported by Investing.com India, the regional M-PMI business activity index continues to track the national M-PMI, which eased to 54.6 in August from July's 55.6. August's final manufacturing PMI came in at 53.9, up from a flash reading of 53.2, while services eased to a final 56.5, down from its flash print of 56.8. Flash September PMIs for the US, Euro Area, UK and India are scheduled for Wednesday, along with a series of Fed speakers including Goolsbee, Williams, Jefferson, and Barkin.
