CPI in Focus as Yields Ease, Chips Slide

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CPI in Focus as Yields Ease, Chips Slide

24,750 ADP Employment Change4.0m Existing Home Sales1.50 Existing Home Sales

S&P 5007,805.45-0.02%

US 10Y Treasury5.21%-3 bp

WTI Crude95.29+1.22%

Gold4,167.00-0.25%

Market Snapshot

Asset	Level	Change
S&P 500	7,805.45	-0.02%
Nasdaq 100	30,569.48	-0.31%
Dow Jones	51,670.10	-0.35%
Russell 2000	2,783.37	-0.40%
USD/JPY	158.43	-0.06%
EUR/USD	1.12	+0.30%
GBP/USD	1.33	+0.42%
Gold	4,167.00	-0.25%
WTI Crude	95.29	+1.22%
Bitcoin	83,324.72	+0.28%
US 2Y Treasury	4.79%	-1 bp
US 10Y Treasury	5.21%	-3 bp

Prior Economic Events

Data	Prior	Cons	Actual
Fed Hammack Speech	-	-	-
Speech by Fed's Waller	-	-	-
ADP Employment Change Weekly	23,750	-	24,750
Existing Home Sales	3.9m	4.0m	4.0m
Existing Home Sales Month-over-Month	-3.20	-	1.50
Speech by Fed's Barkin	-	-	-
Monthly Budget Statement	-167,000m	-29,000m	-
Speech by Fed's Collins	-	-	-
Speech by Fed's Bowman	-	-	-
MBA 30-Year Mortgage Rate	7.49	-	-

Today's Economic Events

Data	Prior	Cons	Time
Core Inflation Rate Month-over-Month	0.30	0.20	08:30
Core Inflation Rate Year-over-Year	2.40	2.50	08:30
Inflation Rate Month-over-Month	0.40	0.60	08:30
Inflation Rate Year-over-Year	3.40	3.60	08:30
CPI s.a	334.13	-	08:30
Consumer Price Index	334.98	336.65	08:30
Speech by Fed's Barkin	-	-	13:30
API Weekly Crude Oil Stocks	-2.1m	-	16:30
Speech by Fed's Bowman	-	-	22:55

Headline and core CPI due 8:30am ET; consensus sees headline at 0.6% m/m and 3.6% y/y, core at 0.2% m/m and 2.5% y/y
Treasuries firmed Tuesday, the 10-year easing 3 bp to 5.21% and the 2-year down 1 bp to 4.79%, while equities closed modestly lower
Existing home sales beat in September at 3.99 million annualized, up 1.5% m/m, offering a rare bright for housing

Yesterday's Recap

US markets closed slightly softer on Tuesday as investors positioned ahead of Wednesday's CPI release. The S&P 500 slipped 0.02% to 7,805.45, the Nasdaq 100 lost 0.31% to 30,569.48, and the Dow fell 0.35% to 51,670.10, with the Russell 2000 lagging at -0.40% as small caps absorbed a continuing chipmaker selloff. Semiconductors extended their decline for a second session, pressuring tech-heavy indices before major bank earnings begin later this week.

The Treasury curve bull-steepened modestly: the 10-year yield eased 3 bp to 5.21% and the 2-year dipped 1 bp to 4.79%, narrowing the 2s10s spread to 42 bp. In data, existing home sales rose to a 3.99 million annualized pace, beating the 3.95 million consensus and rebounding 1.5% m/m from August's 3.93 million print — a notable recovery given mortgage rates near 7.49%. ADP's weekly employment change showed private payrolls expanding by 24,750, marginally above the prior week's 23,750, suggesting labor demand remains positive but decelerating.

The monthly budget statement was scheduled for 2pm, with the prior month showing a $167 billion deficit against a much smaller expected shortfall. Fed speakers were active: Hammack, Waller, Barkin, and Collins all took the podium, while Bowman speaks early Wednesday. Gold slipped 0.25% to $4,167 as the dollar's retreat — EUR/USD up 0.30% to 1.12 and GBP/USD gaining 0.42% to 1.33 — failed to spark safe-haven demand.

WTI crude jumped 1.22% to $95.29, and Bitcoin added 0.28% to $83,325.

The Day Ahead

The centerpiece is September CPI at 8:30am ET, with headline inflation expected at 0.6% m/m and 3.6% y/y, accelerating from August's 3.4% pace. Core CPI is forecast at 0.2% m/m and 2.5% y/y, up from 2.4% previously — a softer core print would reinforce the disinflation narrative and support expectations for continued Fed easing from the current 3.88% funds rate. The seasonally adjusted CPI index level will also be published, with the prior reading at 334.131.

MBA mortgage application data follows at 7am, where the 30-year rate held at 7.49% last week; any renewed rise would test the housing recovery signaled by Tuesday's existing home sales beat. Fed Governor Bowman speaks at 5:40am ET, offering a final pre-CPI signal on the policy path. ↓ p.2

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The Day Ahead (continued)

With no other tier-one releases, equity attention shifts to the chip sector's stabilization and the onset of bank earnings later this week, which will illuminate credit conditions and consumer health. Treasury positioning suggests markets are leaning toward a benign inflation print, with yields grinding lower into the release.

Other Economic Notes

The fiscal picture remains a swing factor, with the Treasury's monthly budget statement due after last month's $167 billion deficit — a figure well above the $29 billion consensus, underscoring persistent deficit dynamics. Housing is emerging as a bifurcated story: existing sales rebounded 1.5% m/m even as 30-year mortgage rates sit at 7.49%, suggesting pent-up demand is overcoming affordability constraints. Labor data continues to soften at the margin, with ADP weekly hiring near 25,000, consistent with the 4.2% unemployment rate but pointing to slower payroll gains ahead.

Corporate America faces a high bar, as S&P 500 earnings momentum becomes harder to sustain with elevated expectations priced in.

Global Macro News

Global gold prices are losing momentum as a series of US economic tests — CPI, GDP revisions, and Fed communications — keep investors cautious, with bullion at $4,167 reflecting consolidation after a strong run. The dollar softened against major crosses, with EUR/USD rising 0.30% to 1.12 and GBP/USD climbing 0.42% to 1.33, while USD/JPY eased 0.06% to 158.43. ↓ p.3

Continuation

Global Macro News (continued)

In Europe, Germany's government is preparing a levy-financed strategic gas reserve for crisis situations, per a Spiegel-reported draft, signaling continued energy-security investment. Canada's housing correction — prices down roughly 20% — is drawing comparisons to the US experience of 2006-2011, though the damage appears more contained. Nigeria's foreign reserves hit $58.81 billion, the highest in 18 years, following a sharp October increase.

Egypt is backing financing for 36 infrastructure projects across southern Nile Basin states, spanning hydropower and grid interconnection. In Asia, the Philippines' energy regulator indefinitely suspended its reserve power market to curb elevated ancillary-service prices, adding policy uncertainty for generators. Chipmakers' global selloff is weighing on Asian export proxies and US indices alike.

Fed Watch

The policy rate stands at 3.88%, and the FOMC's easing cycle remains data-dependent into Wednesday's CPI. The speaker calendar has been dense: Hammack, Waller, Barkin, and Collins all spoke Tuesday, with Bowman due early Wednesday — a final chorus before the inflation print. Waller's remarks will be scrutinized for hints on the pace of further cuts, particularly given core CPI is expected at 2.5% y/y versus 2.4% prior.

The 2-year yield's 1 bp dip to 4.79% suggests markets see the funds rate settling modestly lower over coming quarters, though the 42 bp 2s10s spread indicates the curve still prices a meaningful term premium at the long end with the 10-year at 5.21%. A core print at or below 0.2% m/m would validate the Committee's characterization of disinflation progress and likely cement expectations for another cut at the next meeting. Conversely, a hot headline — consensus 0.6% m/m partly reflects energy pass-through from crude near $95 — could complicate the narrative if it bleeds into core categories.

Watch Bowman's morning remarks for dissenter color: her commentary often previews the range of views inside the Board. With QT still running down the balance sheet, any shift in reserve-management commentary would be a signal worth monitoring into year-end.

US Macro Daily(Beta Mode)