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Most Federal Reserve officials now expect another rate rise by the end of the year. That is in writing, in the minutes released on Wednesday. CME FedWatch put the odds of it coming on 28 October at about 1 in 5 on Friday, with December priced as more likely than not. Wednesday’s September CPI is the number that can move that date. Consensus has prices up 0.6% on the month and core up just 0.2% (investingLive). The big banks report the day before and TSMC the day after, and Fed Chair Kevin Warsh takes the stage in Bangkok on Thursday night. (investingLive, Mitrade)
Last Week:
FOMC Minutes (September Meeting)
“Most participants assessed that another increase in the target range... would likely be appropriate by year end.” Many also said that “despite the recent rise in longer-term Treasury yields, financial conditions appeared to be supportive of economic growth.” The 10-year yield traded above 5.35% on Wednesday and ended the week at 5.24% on the Treasury’s own curve, 4 basis points lower on the week. (Federal Reserve, US Treasury)
US ISM Services PMI (September)
54.9, after 55.4 in August, against 55.2 expected (investingLive). The prices index rose to 74.0 from 72.6, the highest since July 2022. The employment index rose to 50.1 from 47.8, back above the line between firms hiring and firms cutting. (First Trust, investingLive)
Delta Air Lines Q3 (quarter to September)
Adjusted earnings came in at $1.72 a share, below published forecasts that ranged from $1.81 (Benzinga) to $1.92 (Finviz). Delta cut its full-year range to $5.10 to $5.60 a share from $6.50 to $7.50, citing “a $6 billion increase in fuel costs”, after paying $3.61 a gallon in the quarter, up 60%. The shares fell as much as 4% before the open and ended the day near flat. (Delta, Benzinga, Finviz)
University of Michigan Sentiment (October, Preliminary)
46.3. Economists expected 47.8 (investingLive), and September was 48.1, so this is a 5-month low. Households now expect 4.7% inflation over the next year and 3.5% over 5 years, both up 0.1 percentage points. (investingLive, Advisor Perspectives)
The setup: Governor Christopher Waller said in Istanbul on Thursday “I anticipate additional hikes”, adding that they “do not need to come at consecutive meetings”. The S&P 500 set its first record since mid-August on Tuesday and closed Friday at 7,811.54, up 1.2% on the week. Hurricane Isaias came ashore near Destin, Florida, on Friday night as a Category 2 storm after shutting in about 72% of Gulf of Mexico oil output, and Brent settled at $104.72. Trump said the US “will not be attacking Iran at any time prior to the midterm elections”, while the Strait of Hormuz stays closed. CPI on Wednesday is the first inflation number since the minutes put another rise on the table. (Axios, Yahoo Finance, EnergyNow, Al-Monitor)
Week at a Glance
🔴 US CPI (September): Wednesday, 8:30 AM ET / 1:30 PM BST
🔴 JPMorgan, Goldman Sachs, Wells Fargo and Citigroup Q3 Results: Tuesday, Before Open
🔴 TSMC Q3 Results: Thursday, 2:00 AM ET / 7:00 AM BST
🔴 Fed Chair Kevin Warsh with the IMF’s Kristalina Georgieva: Thursday, 11:30 PM ET / Friday, 4:30 AM BST
🟠 US Retail Sales and PPI (September): Thursday, 8:30 AM ET / 1:30 PM BST
🟠 Bank of America, Morgan Stanley and ASML Q3 Results: Wednesday, Before Open
🟠 Fed Beige Book: Wednesday, 2:00 PM ET / 7:00 PM BST
🟠 UK GDP (August): Thursday, 2:00 AM ET / 7:00 AM BST
🟡 Apple Event in New York: Tuesday, 9:00 AM ET / 2:00 PM BST