Monday’s closures in Tokyo and the US cash Treasury market mean thinner liquidity across Asia and into the US session, which can exaggerate moves on weekend headlines from Saudi Arabia, Russia and Ukraine.
- Singapore, Hong Kong, Australia and New Zealand are all open though
For oil, the week links directly to inflation: energy has been the main force holding US headline CPI above 3%, so any renewed crude strength from Gulf attacks would feed expectations of further Fed tightening, while the Russian diesel deal and energy ceasefire point the other way for fuel prices. A hot CPI print would likely lift the front end of the Treasury curve and support the dollar, putting pressure on the yen. Bank results offer an early read on credit quality under higher rates.
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A quiet Monday in Tokyo and on the Treasury desk gives way to the week’s real business: inflation, the banks and one last hearing from Warsh.
Summary:
- Japan is closed Monday for Sports Day; in the US, Columbus Day shuts the cash Treasury market while equities trade normally
- US September CPI is due Wednesday at 12:30 GMT (8:30 ET), the last inflation reading before the October 27-28 FOMC meeting
- August CPI rose 0.4% on the month and 3.4% on the year, driven by gasoline, while core held at 0.3% monthly and 2.4% annually
- JPMorgan, Goldman Sachs, Wells Fargo and Citi report Tuesday, with Bank of America, Morgan Stanley and BlackRock on Wednesday
- September PPI and retail sales follow on Thursday
- Fed Chair Warsh speaks at the IMF meetings in Bangkok early Friday, his final scheduled appearance before the pre-meeting blackout
Markets open the week with holidays on both sides of the Pacific. Japan is closed on Monday for Sports Day, leaving Tokyo’s equity and bond markets shut, while the US observes Columbus Day, when equity markets stay open but the federal debt market is closed. The closures leave Asian liquidity thin at the start of a week that builds steadily toward a US inflation report and a final pre-meeting appearance from Federal Reserve Chair Kevin Warsh.
The calendar shifts quickly to the US on Tuesday, when JPMorgan Chase, Goldman Sachs, Wells Fargo, Citigroup, UnitedHealth Group and Johnson & Johnson all report before the open, offering an early view on credit conditions and lending demand after the Fed’s September rate rise. Bank of America, Morgan Stanley and BlackRock follow on Wednesday, alongside ASML.
Wednesday’s September CPI release at 12:30 GMT (8:30 ET) is the week’s centrepiece, as it is the latest inflation reading before the FOMC meeting on October 28. The August report set a firm baseline: headline prices rose 0.4% on the month after 0.1% in July, with gasoline accounting for more than a third of the increase, while core prices rose 0.3%. On an annual basis, headline inflation held at 3.4% and core eased to 2.4%, with energy up about 16% over the year. Forecasts for September point to energy pushing the headline higher again, with one forecaster expecting a 0.6% monthly rise that would lift the annual rate to roughly 3.7%. A broad consensus had not yet been published.
Thursday brings September producer prices and advance retail sales, both at 8:30 ET (12:30 GMT).
Warsh then gets the final word. He is due to take part in a moderated conversation at the IMF and World Bank Annual Meetings in Bangkok around 04:30 GMT on Friday (00:30 ET), described as a public appearance before the blackout period ahead of the October 27-28 FOMC meeting. Since taking office, Warsh has sought to change how the Fed communicates, moving away from forward guidance while stressing its commitment to price stability, so markets will look to his tone rather than any signal on timing.
The combination matters because energy, not core inflation, is doing most of the work in the headline. A hot print driven by fuel costs would leave Warsh weighing an energy shock against still-moderate underlying inflation, two weeks before the meeting and shortly before the US midterm elections.
Federal Reserve Chair Warsh
This article was written by Eamonn Sheridan at investinglive.com.