Fed Governor Barr made the case for more rate increases, saying the risks to getting inflation back to 2% have grown while the risks to jobs have eased. His remarks followed S&P Global’s flash Purchasing Managers Index (PMI) surveys, the earliest monthly read on US business activity, which came in well above forecast. The surveys’ measures of prices rose to the highest since October 2022. Brent Crude Oil rose back above $100 a barrel after five straight daily falls, as Iranian President Pezeshkian used his United Nations (UN) speech to rule out negotiating under pressure.
Rate futures, the contracts traders use to bet on the Fed’s next move, now give an increase on October 28 about a 73% chance. When the Fed actually raised rates on September 16, the 10-year fell back under 5% the next day, so a speech and a survey have now done more to it than the increase did.
The 10-year yield is trading just under 5.10%, at the top of its range for the session and above its mid-September highs just over 5%. Its daily closes had stayed just under 5% for four sessions after the Fed’s increase. The run started from just above 4.60% in late August, and the two-year and 30-year yields are higher alongside it.
