Let the doves sing
SPY•Singapore unexpectedly held monetary policy steady as markets responded to less hawkish signals from U.S. Federal Reserve officials. Analysts expected U.S. September inflation to rise 0.6% month on month, while traders priced a 77% chance of no Fed rate change at its October 27-28 meeting.
1. Policy signals turn dovish
The Monetary Authority of Singapore kept policy on hold, contrary to expectations from all 10 analysts polled, saying growth and inflation were expected to ease. Traders saw a 77% chance that the Fed would leave rates unchanged at its October 27-28 meeting, up from 51% a month earlier, and priced about 75 basis points of tightening by late 2027.
2. Inflation and earnings ahead
The main U.S. data release was September’s consumer price index. Analysts expected a 0.6% monthly increase, compared with 0.4% in August, and annual inflation of 3.6%, up from 3.4%. The Fed was also due to publish its Beige Book, while BlackRock, Morgan Stanley and Bank of America were scheduled to report results.
3. Oil and markets
Oil prices climbed in Asian trading after further attacks by Yemen’s Iran-allied Houthis on Saudi Arabia; Iranian officials described new tactics targeting ships in the Strait of Hormuz. China’s export growth beat market forecasts in September. In early European trading, Euro Stoxx 50 futures rose 0.36%, DAX futures gained 0.38%, FTSE futures edged up 0.07%, and S&P 500 e-minis rose 0.22%.
