Market Update

Rate Hike Odds Rising: What Inflation Data Shows

By Steve AnkerstarPublished September 4, 2026

The short answer

Rate hike odds moved from roughly 50/50 to 60/40 after Federal Reserve Governor Waller signaled support for holding rates steady, then a stronger-than-expected August jobs report reversed that relief. Commodity prices, global bond yields, a weaker dollar, and freight costs up roughly 200 percent since February all point to persistent inflation pressure, even as markets stay focused on AI-driven growth.

Full video transcript

How about that rally yesterday with the S&P 500 popping 1% on the news that we had a Federal Reserve Governor Waller indicate that he would support holding rates steady at the September meeting. It did send some bond yields lower. It gave the market some relief. You saw about a 1% pop in the S&P 500. But Mr. Market today is saying, "Waller, not so fast. We actually have odds of a rate hike." Do you remember looking at this yesterday with me? Odds of a rate hike increasing from yesterday being like a 50/50 chance to today being more of a 60/40 chance of a rate hike in just a couple of weeks. Why is the market drifting from the talk is cheap of Fed Governor Waller? It's because we've got a hot payroll number here in August of 162,000 jobs created, a very low unemployment rate. Remember, this is going to indicate here that the economy is running pretty hot. I'm actually going to show you. Let's look at some data around things being a little hot and potentially fanning the flames of inflation. You got that commodity index. So, this is a basket of commodities, ticker DBC, hit an all-time high yesterday. So, this isn't just oil. It's not just things, farm stuff, whatever, food. It's everything, every commodity, every input that goes into making all the things that we consume and use and eat and all that. All-time high yesterday. You know, of course, we've talked about US bond yields, but if you look globally, it's happening all around the world. You're seeing rates, interest rates break out all around the world. Remember the world has been pretty obsessed with debt in recent years, really since COVID, but even before that a little bit, but really since COVID. Again, it's the whole world. Interest rates globally are indicating that some inflation is still coming, right? Commodities are indicating that. The jobs market is hot. Bond yields are increasing. The dollar is remaining weak, right? As a weaker dollar, you could see that kind of level of polarity there around 100. You're below 100, kind of can assume as a weaker dollar. You're above 100 on this index, and that's a stronger dollar. Well, we're below 100 again. We thought we were getting stronger there, but we quickly fell back below 100, and you could be in an environment where dollars are worth a little less, and takes more of them to get things done in the economy, aka some inflation. I got another one for you. What about the containerized freight index? The containerized freight index, so this is what it costs to move your stuff from point A to point B. And you've seen what? What are we up from? We're up 200% since February. That's not good. Oh, look at this spike coming up in 2021. What did that coincide with? A massive spike in inflation. Here's the deal about containerized freight. This filters through to everything. Where are you going to lunch today? What grocery store are you going to? Because all of those places of business are going to have to account for this input cost. And this is not a commodity input cost. Remember, commodity all-time high yesterday. Container freight. So, you got the commodities going into the stuff, all-time highs. You got the freight, what it costs to move this stuff, all-time high. What's going to happen to the price of the item when you go to purchase it? It's going higher. And then of course you do have your energy stocks hit all-time high this month. I don't know if it was September 1st, 2nd, whatever, one of the two. So, the market today, of course, the market knows very strong. The market doesn't really have worries right now. The market is focused on the potential benefits of AI and a strong economy that we do obviously have. That's all good. And we do want to at all times, you want to err on the side of actually not. And that's weird. And sometimes in life, you want to err on the side of caution. In the stock market, you want to stay on the side of optimism as long as you possibly can. Because the market is going to try its best to look forward and look through any current drama that's going on. And the market is usually right to do so. And you know, if you've been following me, you know, I really do think the rally comes down to basically a single stock. And this stock is flirting with all-time highs. I think as long as you've got your beloved Nvidia strong, above a 200-day moving average, moving higher. What are we at? 6 trillion? No, 5.6 trillion. This is not quite 10% of the S&P 500, you know, but eight or so percent. As long as you've got this guy on your team, this player scoring goals or whatever, scoring baskets, if this guy is helping your team win, then the team can win. When Nvidia starts to, which it will, it always does, that's just the way that this stock works. It's a cyclical deal. But, going back to 2022, 2021, when Nvidia starts to slip below the 200-day moving average, whatever, break down, whatever that looks like, that's when you know that the AI rally is going to cool off from here. So, it's pretty simple. That's what we've got today. It's an inflation story kind of day, but it's also a bullish day because Nvidia's working, AI's working, and there was some optimism around some new models released yesterday. So, all good stuff. Hey, thank you so much for joining us today. Hope you find this interesting. We really do appreciate you joining us and look forward to talking to you soon. Oh, last thing. This is a financial education presentation. You must do your own due diligence before acting on anything you hear in this presentation. More disclaimer information can be found at ankerstarwealth.com. The opinions expressed are mine alone. Talk to you soon.

What Shifted Rate Hike Odds in a Single Day

The S&P 500 gained about 1% after Federal Reserve Governor Waller signaled support for holding rates steady at the September meeting. Bond yields fell and the market found temporary relief. But the following day, rate hike odds swung back to roughly 60/40, up from 50/50 the day before.

The catalyst was a hot August payroll report: 162,000 jobs created with a very low unemployment rate. The market read this as a signal that the economy may be running too hot, which could keep inflation persistent. Waller's comments suggested caution, but the jobs data pushed traders back toward pricing in a hike. Steve walks through this shift at (0:35).

Commodities Hit All-Time Highs

The commodity index (DBC) reached an all-time high, and the increase is not isolated to a single category. Energy, agriculture, and raw materials are all contributing. Every input that goes into consumer goods is affected, which means the cost of producing nearly everything is rising. Steve explains the commodity breakout at (1:05).

Global Bond Yields and the Weak Dollar

Bond yields are breaking out worldwide, not just in the United States. The global economy's increased debt issuance since COVID has influenced rate dynamics, but the current breakout across multiple regions suggests markets are pricing in persistent inflation.

The dollar index sitting below 100 adds another signal. A weaker dollar means it takes more dollars to purchase the same goods, which contributes to inflationary pressure. The index had briefly appeared to strengthen before falling back below 100. Steve covers the global yield and dollar picture at (1:45). For retirees drawing income from bond portfolios, shifts like this are worth reviewing with your advisor — see our retirement planning approach for how we help clients navigate a changing rate environment.

Containerized Freight Costs Surge 200%

The containerized freight index shows shipping costs up approximately 200% since February 2026. This mirrors the pre-2021 spike that preceded the last major inflation surge. Freight costs filter into virtually every consumer price, from restaurant menus to grocery store shelves, because every business must account for higher transportation expenses.

Combined with commodity inputs at all-time highs, both the raw materials and the cost of moving them are rising simultaneously. Energy stocks also reached all-time highs in early September. Steve details the freight index at (2:35).

Why the Market Stays Strong Despite Inflation

Despite the inflation signals, the market remains strong. The focus is on the potential benefits of AI and a resilient economy. Steve notes at (4:35) that in the stock market, staying on the side of optimism is generally the right approach, because the market typically tries to look through current headlines toward future growth.

The market is usually right to do so, which is why attempting to time exits based on cautionary signals often underperforms. However, the underlying inflation data warrants attention, particularly for how it may affect Federal Reserve policy decisions.

Nvidia: The AI Rally's Key Signal

The current market rally largely comes down to a single stock. Nvidia, with a market capitalization of approximately $5.6 trillion, represents roughly 8% of the S&P 500. As long as Nvidia holds above its 200-day moving average, the AI-driven rally has continued.

The signal to watch is straightforward: when Nvidia breaks below its 200-day moving average, that has historically been the indicator that the AI rally is cooling off. Nvidia is cyclical by nature, and pullbacks are expected. But the 200-day level is the technical line that separates a healthy pullback from a broader trend change. Steve discusses this at (5:35). Concentration risk from a single stock driving market returns is a theme we address directly in our investment planning work.

This article is general information, not personalized investment, tax, or legal advice. Your situation is specific to you — talk to a qualified professional before acting on anything here.

Frequently asked questions

What are the current odds of a Federal Reserve rate hike in September 2026?

As of early September 2026, rate hike odds shifted to approximately 60/40 after a strong August jobs report showing 162,000 jobs created. The odds moved from 50/50 the prior day, when Fed Governor Waller signaled support for holding rates steady.

Why are commodity prices at all-time highs?

The commodity index (DBC) reached an all-time high because increases are broad-based across energy, agriculture, and raw materials. This affects the production cost of nearly all consumer goods, not just a single category.

How do containerized freight costs affect inflation?

Containerized freight costs are up roughly 200% since February 2026. These costs filter into every consumer price because businesses must account for higher transportation expenses. A similar spike in 2021 preceded the last major inflation surge.

What is the key technical level to watch for the AI rally?

Nvidia's 200-day moving average is the primary signal. As long as Nvidia trades above this level, the AI-driven market rally has continued. A break below it has historically signaled that the rally is cooling off.

Should investors change their strategy based on inflation signals?

The data shows multiple inflation signals, including commodity highs, rising global bond yields, and surging freight costs. However, the market remains focused on AI momentum and economic resilience. Investors should consider their individual circumstances and speak with a financial advisor before making changes. This is a financial education presentation, and you must do your own due diligence before acting on anything you hear or read here.

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