Key facts
- US headline inflation is expected to jump to 3.7% in September.
- Core inflation excluding energy and food is expected to run at about 2.5%.
- China's exports rose more than 30% on an annual basis in September.
- China's trade surplus reached $938 billion for the first nine months of the year.
- New York Fed chief John Williams indicated no reason to expect another Fed rate hike in 2027.
Markets are shifting focus to the US September inflation report, with global crude oil prices around $106 per barrel due to Middle East tensions, suggesting headline inflation could reach 3.7%. However, core inflation, excluding energy and food, is anticipated to be around 2.5%, which some Federal Reserve officials view as manageable for policy.
New York Fed chief John Williams stated on Tuesday that while another Fed rate hike might be necessary by year-end, he does not foresee any further increases in 2027. This perspective contrasts with futures market pricing, which currently anticipates three additional rate hikes. Bond markets have shown relative calm in the past 24 hours despite elevated oil prices.
US bank stocks experienced a downturn following third-quarter earnings reports. JPMorgan and Goldman Sachs disclosed significant, unexpected losses in their fixed income trading divisions during a volatile quarter marked by the Fed's first rate increase in three years and a sharp decline in bond prices. Citigroup saw the largest single-day drop, falling over 5%. Morgan Stanley, Bank of America, and BlackRock are scheduled to release their earnings on Wednesday.
In international trade, China's exports saw a substantial increase of over 30% year-on-year in September, driven by strong shipments of technology equipment and automobiles. This surge positions the country to achieve another trillion-dollar trade surplus in 2026, a month earlier than the previous year. Consumer inflation in China remained subdued, even as factory input prices rose sharply. Imports also exceeded forecasts for the month.