Market participants abruptly shifted their expectations for Federal Reserve policy on Tuesday by lowering the probability of a rate hike in October. Some estimates now price the likelihood of a next-month increase as low as 44%, a steep drop from a peak of 70% earlier in the week. This reversal follows remarks from John Williams, vice chair of the FOMC, who told listeners there is "no need for urgency" for further tightening after the central bank's action in September.

Williams stated that one additional upward adjustment to the federal funds target range may be appropriate late this year to return inflation to target. The Fed is currently reviewing economic momentum and upcoming reports to guide its next move, with the Labor Department scheduled to release the September jobs report this Friday.