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Analysts spent early November warning a Trump victory in the U.S. presidential election would make the Federal Reserve less likely to raise interest rates. What happened instead is that it made a December increase almost a certainty.

Traders assign about a 94 percent probability, the highest level this year, to a Fed move at its final meeting for the year on Dec. 13-14, futures contracts indicate. Trump’s spending plans are driving speculation the Fed will pick up its pace of rate increases as inflation expectations climb.

The odds of a Fed move have climbed from 68 percent at the start of the month as inflation expectations surged.’’

Bonds Rise With Emerging Markets After Trump Selloff; Oil Surges

The fallout from Donald Trump’s election to the U.S. presidency eased off in financial markets with Treasuries and emerging markets halting their slide. Stocks jumped with crude.

The yield on benchmark Treasury 10-year notes dropped three basis points, or 0.03 percentage point, to 2.23 percent as of 4 p.m. New York time. The 41 basis-point jump over the last three trading sessions marked the steepest climb in more than seven years and the 14-day relative strength index for the securities indicated they were the most oversold since 1990, a potential signal that they may be set for a reversal.

The MSCI Emerging Markets Currency Index rose 0.4 percent as Mexico’s peso and South Africa’s rand rallied more than 1.8 percent. China’s yuan slipped to its weakest level since 2008.

China’s Yuan Tumbles to Eight-Year Low as Banks Weaken Forecasts

The currency fell to 6.8703 against the greenback, the weakest since December 2008 and beyond a Bloomberg survey’s year-end median estimate of 6.8. A gauge of dollar strength dropped for a second day after posting the biggest four-day rally in seven years following Donald Trump’s surprise win in last week’s presidential election. The Republican has promised to label China a currency manipulator and slap tariffs on the nation’s exports.

Standard Chartered Plc Wednesday joined at least four other banks in lowering its forecasts for the yuan, predicting a year-end level of 6.9, compared with 6.75 earlier. HSBC Holdings Plc, UBS Group AG and Australia & New Zealand Banking Group Ltd. lowered their yuan forecasts on Tuesday, predicting that the currency will end this year at 6.9 per dollar, compared with earlier estimates of 6.8 for the first two lenders and 6.75 for the third. BMI Research, a unit of Fitch Group, downgraded its year-end forecast to 6.85 from 6.8, while Norddeutsche Landesbank said it has revised its view to 7 from 6.8.

“The pressure for the yuan to decline could be stronger next year as Trump’s policies could lead to a dollar rally and amid concerns about China-U.S. trade relations," said Harrison Hu, chief greater China economist at Royal Bank of Scotland Group Plc in Singapore. "The People’s Bank of China can curb high volatility with stronger fixings and intervention, but it won’t do so unless outflows surge, as such measures could add great pressures to the foreign reserves."

Wage Growth Is Galloping Higher at Its Fastest Pace in Nearly 8 Years

The Atlanta Fed's Wage Growth Tracker indicates that the median U.S. worker saw pay rise by 3.9 percent year-over-year in October, the fastest rate of growth since November 2008.

This number comes on the heels of October’s non-farm payrolls report, which showed average hourly earnings increasing at the fastest annual clip of this current expansion, a sign that the economy is getting close to full employment.

Oil prices extend rally, shrug off U.S. stock build

Oil futures rose on Wednesday, shrugging off an industry report that showed an unexpected build in U.S. crude stocks, and adding to gains of nearly 6 percent from the previous session.

Oil prices had surged on Tuesday as members of the Organization of the Petroleum Exporting Countries (OPEC) were set to renew efforts on concrete steps to implement a deal on cutting output in the face of a persistent global glut.

U.S. benchmark crude CLc1 was up 23 cents at $46.04 a barrel at 0704 GMT. On Tuesday, the contract surged 5.8 percent to $45.81 per barrel in its biggest intraday percentage rise since early April.

Reference: Bloomberg,Reuters