Fed's Waller Signals Patience on Rates, Boosting Stocks as Yields Slide
Federal Reserve Governor Christopher Waller indicated he would back holding interest rates steady at September's meeting if inflation continues to show signs of cooling. Market odds for a rate hike dropped to 50.4% from 63.2% after his remarks, while Treasury yields retreated and major stock indexes moved higher on Thursday.
Waller’s remarks shifted market expectations for the September Federal Reserve meeting, with futures traders cutting the probability of a rate hike to roughly half. The move followed a recent spike in Treasury yields, partly driven by rising oil prices, which had pushed the 10-year note to its highest level since late 2023. A stronger Japanese yen also helped ease pressure on U.S. bonds before Waller spoke.
The S&P 500 and Nasdaq posted solid gains, while the Dow recorded its best session since early August. Snowflake shares surged after better-than-expected earnings, adding to the positive tone. However, analysts cautioned that elevated crude prices and the Fed’s stated focus on inflation could keep rate concerns alive, especially ahead of upcoming payroll data.
This development may reassure investors who feared an aggressive rate path, potentially supporting borrowing costs for households and businesses. Yet if oil stays high, the Fed could still tighten, affecting mortgage rates, credit, and stock valuations. Market swings like these influence retirement accounts and corporate investment decisions, meaning Waller’s signal could shape economic confidence in the near term, though outcomes remain uncertain.