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Fed Meeting: Markets Brace for Inflation Fight
16 Sep
Summary
- Euro zone bond yields near 17-year highs on inflation worries.
- Markets anticipate a quarter-point Fed rate hike and tightening guidance.
- Oil prices retreated, but natural gas prices saw a 2.5% increase.
As of September 16, 2026, benchmark Bund yields in the Euro zone remain near 17-year highs, with traders pausing after increasing bets on further European Central Bank (ECB) rate hikes. This comes as inflation concerns persist, briefly pushing the deposit rate above 3.5% this week.
Markets are also keenly awaiting the Federal Reserve's policy meeting decision. Traders widely anticipate a quarter-percentage-point increase, setting the range between 3.75% and 4.00%, alongside guidance that suggests further tightening. Germany's 10-year bond yield has reached its highest point since June 2009. France's 10-year government bond yields have also risen, nearing levels not seen since September 2008, amidst ongoing concerns about the country's fiscal trajectory.
In commodity markets, Brent crude oil futures have retreated after a two-day rally, influenced by an unexpected increase in U.S. crude inventories. Conversely, natural gas prices have seen a roughly 2.5% rise. The ECB's updated wage tracker indicates a modest increase in negotiated pay growth for the first half of 2027, which is expected to contribute to a deceleration in unit labor costs.
