By Radarr Africa Business Desk
LAGOS, November 5 (Radarr Africa) – Financial markets are pricing a high chance that the US Federal Reserve will raise interest rates at its December meeting, with the CME FedWatch Tool showing 81 per cent odds of a hike, according to a Charles Schwab market update published on November 4.
Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research, said the labour market could be decisive for the December Federal Open Market Committee (FOMC) meeting. The next test is the nonfarm payrolls report due on Friday, with a consensus forecast of 65,000 jobs, Schwab said. ADP reported 86,000 private-sector jobs added in October, near expectations.
The Rio Times, in its global economy briefing of November 4, gave a lower probability from a different source: Polymarket bettors put the chance of a quarter-point hike on December 9 at 74.5 per cent. It said the Fed held rates at 3.75 per cent to 4.00 per cent on October 28 by a 10-2 vote, with Lisa Cook and Beth Hammack favouring a hike.
The Rio Times also reported that US consumer prices rose 3.7 per cent in September and that September payrolls rose by 29,000. Its 10-year Treasury yield figure was 4.974 per cent, after a rise of 6.5 basis points. Schwab’s figure for the 10-year yield, at 9:12 a.m. Eastern Time on Wednesday, was 4.92 per cent, down 0.02 percentage points. The two figures were taken at different times.
The Rio Times briefing contained internal inconsistencies, including different index levels in its text and in its live board, so its figures should be treated with caution.
Energy prices are part of the inflation picture. CNBC reported last week that two Fed presidents said rates will need to rise, and that high oil prices have contributed to US inflation and gasoline prices. Brent crude had reached its highest level since 2022 before falling more than 7 per cent on Monday.
The dollar index fell 0.35 per cent to 101.39 and gold slipped 0.25 per cent to $3,938 an ounce in the Rio Times briefing, while Schwab showed gold up 2.84 per cent at $4,052.30. The difference reflects different timing and sources.
For emerging markets, higher US yields narrow the return gap with local assets. The Rio Times said a 4.974 per cent US 10-year yield narrows the gap with Brazilian assets, ahead of a Brazilian central bank decision expected to hold the Selic rate at 13.75 per cent. Mexico’s central bank also decides on Thursday, with the prior rate at 6.5 per cent.
Nigeria’s Financial Markets Dealers Association said last month that US 10-year yields fell 36 basis points to 4.93 per cent in October while Nigeria’s 10-year bond yield rose to 16.63 per cent.
Schwab said markets generally welcome a divided government because it limits sweeping policy changes, and that a split Congress could help keep Treasury yields in check.
The Rio Times attributed its rate-hike probability to Polymarket, a prediction market, while Schwab cited the CME FedWatch Tool.
