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Central BanksMedium•23 June 2026•

1 min read

Markets Eye US PCE Data as Hawkish Fed Signals September Rate Hike

Key Facts

1Markets are awaiting the PCE inflation report due Thursday to gauge the likelihood of a Fed rate hike.

2New Fed Chair Kevin Warsh's hawkish debut has triggered a sharp repricing in Fed funds futures.

3Markets now see a September rate hike as likely, which would be the first increase in three years.

Global markets are shifting focus to the upcoming Personal Consumption Expenditures (PCE) price index due Thursday to gauge the likelihood of an interest rate hike. The hawkish debut of the new Federal Reserve Chair, Kevin Warsh, has triggered a sharp repricing in Fed funds futures. According to reports, markets now view a September rate hike as likely, which would mark the first increase in borrowing costs in three years.

This shift in expectations comes as recent data shows resilient consumer activity, with US Retail Sales growing 0.9% in May, exceeding the 0.5% forecast per market data. Additionally, Treasury data shows the 20-year bond auction on June 16, 2026, cleared at a yield of 4.927%. Investors are weighing these US inflationary signals against global trends, such as the UK's annual inflation rate which held steady at 2.8% in June according to official statistics.

Traders are currently monitoring liquidity levels following the Fed's decision on June 17, 2026, to maintain interest rates at 3.75%. Looking ahead at the economic calendar, Thursday's PCE release stands as the primary catalyst for market direction, followed by any subsequent commentary from Fed officials before the blackout period preceding the pivotal September meeting.