Traders have scaled back their aggressive outlook for the Federal Reserve’s upcoming October meeting, with the probability of a rate hike now hovering around 15%. A pause in tightening has become the base case for the Oct. 27-28 session, though markets remain braced for a potential 25-basis-point increase in December, currently priced at 89%. This shift follows a period of volatile economic data, including September producer prices surging 6.3% annually and industrial output providing a rare signal of resilience.

Energy markets are providing a complex backdrop for these movements. Crude prices retreated after reports that President Donald Trump temporarily waived certain sanctions on Russia, potentially easing some of the supply-side anxieties stemming from the ongoing crisis in the Strait of Hormuz. Despite this, the region remains a flashpoint; oil shipments through the corridor remain 41% below prewar levels. For gold, the cooling of oil prices offers a reprieve from immediate inflationary heat, yet the unresolved geopolitical risk in the Gulf continues to underpin defensive demand. Investors are now turning their attention toward a heavy week of corporate earnings and U.S. economic releases, including housing starts and jobless claims, which will further clarify whether the economy can withstand current cost pressures.