Fed signals more work ahead as oil markets brace for fall maintenance season

The August jobs report lands Friday, but the dominant market story coming out of last week was Federal Reserve Chair Jerome Powell's speech at Jackson Hole. Powell told the assembled central bankers that "underlying inflation trends have not" improved and the central bank has "work to do." Since then, market expectations have shifted sharply: traders now see roughly even odds of another quarter-point rate hike in December, and the futures market is pricing in a move that would bring rates higher still.

The inflation fight is not over

Inflation hawks like Dan North at credit insurer Allianz Trade see the futures market as having it exactly right. "There's been no progress on inflation. We're right back to where we were before the war started," North said. He points to the PCE price index, which remains nowhere near the Fed's 2 percent target. "Without an interest rate hike, you're gonna have a hard time reaching that. We're still quite a ways from it, and it's been very, very sticky. An interest rate hike is certainly warranted."