Minutes from the Federal Reserve’s September meeting will dominate a quieter data calendar. The account is likely to show broad support for further tightening after policymakers unanimously raised rates, although it predates the softer employment report and downward revisions to core PCE inflation. US ISM services and consumer sentiment will provide more current readings on activity.

The European Central Bank publishes its September meeting account on Thursday, while a heavy speaking schedule may offer more timely guidance. The account of the interest decision may lift the veil on how concerned the Governing Council is about inflationary pressures.

India’s central bank is expected to raise rates on Wednesday as stronger growth, accelerating inflation and higher commodity prices increase pressure on policymakers. Japan’s wage data, German industrial production and Canada’s employment report are the other principal releases.

Markets will also digest Brazil’s first-round election result and OPEC+’s decision to leave November production targets unchanged. Persistent disruption to Middle East energy supplies should keep oil prices and bond yields in focus. Italy’s government faces a confidence vote on electoral reform on Thursday, while S&P reviews the UK’s sovereign rating on Friday. (LS – Continue Reading)

Artificial intelligence is causing a surge in demand that is fueling inflationary pressure and long-term interest rates, with an impact that may affect the neutral rate of interest, according to Bank of Japan Deputy Governor Shinichi Uchida.

“First, it is a big positive demand shock, which has put upward pressure on the economy and prices. Second, it could affect the supply side, perhaps positively by raising productivity and enhancing capital stock accumulations, which might in turn affect r-star,” Uchida said in a speech Monday. (BBG – Continue Reading)

Federal Reserve policymakers were already leaning against delivering a second straight rate hike this month to give them time to sift through more economic data before pulling the trigger again, and a cooler than expected job market report Friday leaves that approach intact.

Still-to-come data, particularly the closely-watched consumer price index measure of inflation coming just before the Fed's October 27-28 policy meeting, could yet shift that calculus.

After increasing the policy rate by a quarter of a percentage point last month to put inflation on a "timelier" path toward the Fed's 2% goal, US central bankers are now weighing the risks of moving too slowly to tamp down price pressures against potential harm to the labour market should they move too fast. (RTRS – Continue Reading)