As Traders Watch Oil, Markets Start to Hear Different Drummer

A move higher in oil prices could continue to support stocks Wednesday, as markets dance around growing expectations for a Fed rate hike.

Fed funds futures Tuesday were forecasting a nearly 40 percent chance of rate hike in June and 68 percent chance in July — a jump from Monday’s levels of around 30 percent and 60 percent. At the same time, bond yields moved higher and stocks soared. Oil closed higher with West Texas Intermediate rising above $49 per barrel in late trading — a level last seen in October.

Three Fed speakers could add to the drumbeat for higher rates Wednesday, which began in earnest last week when the Fed released minutes that showed Fed officials would like to hike as soon as June. Philadelphia Fed President Patrick Harker speaks at 9 a.m. EDT on the economy; Minneapolis Fed President Neel Kashkari speaks at 11:40 a.m. at the Williston Basin Petroleum Conference in North Dakota, and Dallas Fed President Rob Kaplan speaks in Houston at 1:30 p.m. EDT.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.