A Fed hold looks near-certain, December does not
Global markets are entering a crowded stretch of rate announcements and corporate results. The Federal Reserve will publish its decision in the early hours of Thursday, Beijing time, and traders broadly expect the federal funds rate to remain where it is. Attention is concentrated instead on Chair Kevin Warsh and how he frames inflation and employment at the post-meeting press conference, since investors want clues about a possible December move.[S1]
Futures pricing tracked by FedWatch puts the odds of no change this week at about 90%, leaving roughly a 10% chance of a quarter-point increase. Bets on a December hike have strengthened noticeably, and money markets have already fully discounted two increases by April of next year. Recent remarks from Fed officials support that reading: Philip Jefferson, Michelle Bowman and Christopher Waller have each indicated another hike is possible without being urgent now. ING economist James Knightley wrote that markets and economists broadly agree this meeting will end in a hold.[S1]
Data due the following day will shape the rate outlook. The first estimate of US third-quarter gross domestic product arrives alongside the September personal consumption expenditures price index, the gauge the Fed prefers. Consensus figures point to core PCE gaining 0.3% on the month against 0.2% before, and 3.1% year on year against 3%. Headline PCE is seen at 0.5% monthly versus 0.3%, and 3.6% annually versus 3.4%. September durable goods orders, October consumer confidence, September new home sales and weekly jobless claims are also scheduled.[S1]
ECB and BOJ follow, with French debt in the spotlight
The European Central Bank announces its decision on Thursday, and the market expects the deposit rate to remain at 2.50%. French government bond yields have climbed sharply on budget and debt worries. The 10-year yield rose almost 27 basis points last week, the biggest gain among major euro-area sovereigns, and the country's risk premium reached its highest level since the 2011 euro-area debt crisis. Morgan Stanley analysts argued there is no sign yet that a second energy shock would meaningfully feed inflation indirectly, and that higher long-term yields are themselves tightening conditions, which reduces the case for action this week and makes December a more natural moment to move.[S1]
The Bank of Japan will announce its decision and publish its economic outlook on Friday. Nikkei Asia, citing sources, reported that the BOJ will leave its policy rate at 1.25%, having lifted it by 25 basis points only in September.[S1]
Earnings season peaks as oil and metals swing
US results enter their heaviest week, with roughly a third of S&P 500 companies reporting. Alphabet and Microsoft report Thursday, followed by Amazon and Intel on Friday. Investors are focused on cloud growth, how artificial-intelligence revenue converts into profit, and returns on data-center spending, with Wall Street examining capital-expenditure guidance from the three hyperscale cloud providers. Memory demand, pricing and AI-server orders at SK Hynix, Samsung Electronics and SanDisk are also in view. In Hong Kong, HSBC Holdings reports third-quarter results Tuesday, with China Construction Bank and Industrial and Commercial Bank of China following Friday.[S1]
US indexes diverged last week: the S&P 500 lost 0.47%, the Nasdaq 0.71%, while the Dow added 0.41%. A third consecutive monthly decline in the University of Michigan's October consumer confidence index weighed on risk appetite, and defensive utilities and health care also fell as investors trimmed exposure before the Fed meeting. Europe's main benchmarks all dropped, with the FTSE 100 down 1.76%, the DAX 30 down 1.72% and the CAC 40 down 2.19%.[S1]
Crude was the week's standout. Continued Houthi strikes on Saudi oil facilities raised Persian Gulf supply risks, lifting New York crude 1.83% to $103.27 a barrel and Brent 6.24% to $116.72. Zahir Anwari, founder of The Revacy Fund, noted in a research note that a strong rebound in Gulf exports and emergency stock releases have eased immediate supply fears without removing the danger, since regional shipping is still disrupted, freight and insurance costs are high, and a fresh attack on energy infrastructure could tighten supply quickly. Higher energy prices fed inflation worries and reinforced expectations of prolonged high Fed rates, pushing COMEX gold down 4.05% to $3,991.10 an ounce and silver down 5.76% to $53.71. Figures cover the week ended October 24, with crude and metals at front-month settlement.[S1]
What to watch in the coming days
For investors, the decisive question is not whether the Fed holds, which is already reflected in a 90% probability, but how Warsh characterizes inflation and the labor market and how firmly he signals December action. Hawkish language at the press conference could restore support for Treasury yields and the dollar, while gold and silver, already weakened by high-rate expectations, could face further correction. Technology shares will hinge on capital-spending guidance, and currency trading has been quiet going into a week dominated by central bank decisions.[S1][S2][S3]
