The Fed Is Expected To Hold Wednesday With The Ten-Year Back At 5%

Almost every economist Reuters surveyed expects the Federal Reserve to leave interest rates alone on Wednesday and to raise them in December, a reversal of what the same forecasters said a month ago. The ten-year Treasury yield closed Friday, October 23 back at 5.00%. Abroad, Lula da Silva won Brazil's runoff after losing the first round, U.S.-listed Brazilian shares fell before the American open, and Moody's spared France the downgrade its debt market had already priced in.

Fast Facts

• Artificial intelligence has delivered "zero financial payoff to corporate America outside of tech," wrote Apollo Global Management's chief economist Torsten Slok, who found profit margins and revenue per worker roughly flat across the S&P 500 outside its seven largest technology companies (Read More)
• Meta's recent penalties and settlements now total $42 billion: a $25 billion jury penalty in the Cambridge Analytica privacy case, which it says it expects to overturn on appeal, plus $17 billion agreed in August (Read More)
• Elon Musk said SpaceX has closed $40 billion of debt financing to buy chips for its artificial-intelligence business, with the hardware due in the first half of 2027 (Read More)
• Netflix said on October 14 that it will cut roughly 1,000 jobs, about 6% of its staff and its largest round in years, as revenue growth slows (Read More)
• Technology billionaires have raised more than $300 million to fight California's proposed tax on billionaires (Read More)
• Shoppers increasingly suspect stores of setting a different price for each customer using what software knows about them; Walmart, McDonald's and other large chains say they do not (Read More)

Global News

• Fourteen years of rule by Serbia's governing party ended on Sunday, with former president Aleksandar Vucic conceding to a student-led movement he put at 135 to 140 of the 250 parliamentary seats (Read More)
• A sixth consecutive monthly rise in German business sentiment suggests the country's tentative recovery is holding up despite its energy-price shock and the higher cost of credit (Read More)
• China's yuan reached a four-year high against the dollar after the People's Bank of China set its daily reference level at the strongest point since early February (Read More)
• Japan's Nikkei 225 slipped 0.43% for a third straight session as chipmakers fell, while the broader Topix index rose 0.48% (Read More)

The Fed Is Expected To Hold Rates Steady On Wednesday While The Inflation Data Argues For A Rise

The Federal Reserve's rate-setting committee meets Tuesday and Wednesday, and almost nobody who forecasts this for a living expects it to move. Its target range is 3.75% to 4.00%, the band it wants the rate banks charge each other for overnight loans to sit inside, and it got there with a unanimous quarter-point increase in September. A Reuters poll of 100 economists taken October 16 to 20 found 94 expecting no change when the statement comes out on Wednesday, October 28. The surprising part is December: every one of the 100 expects an increase then, up from fewer than half in the previous month's poll.

Our last briefing ended on a question: would the ten-year Treasury yield stay below 5%? It had fallen to 4.96% on Thursday, October 22. It did not stay there. The Treasury's own daily reading put it at 5.00% at the close of Friday, October 23, four hundredths of a percentage point higher. The two-year note, a read on where investors think the Fed is heading with short-term rates, closed that same Friday at 4.69%.

So why would a committee wait when the inflation readings argue for moving? Its own officials have been counseling patience: Vice Chair Philip Jefferson and New York Fed President John Williams have both signaled little urgency to raise, and Chair Kevin Warsh has said he does not prejudge meetings. The Wall Street Journal's read is that those calls, plus the November 3 midterm elections the following week, make a surprise increase hard to pull off. The range matters at a kitchen table: credit-card and car-loan rates follow short-term borrowing costs, while a thirty-year mortgage is priced off the ten-year Treasury yield.

The case for moving is in the data. Consumer prices rose 0.6% in September 2026, the Bureau of Labor Statistics' most recent monthly reading, and the unemployment rate that month was 4.2%, which is not the picture of an economy that needs help. Among forecasters the argument is less about whether the range rises than about when: 38 of the 92 who answered expect at least two more increases. A poll is a survey of opinion and not a decision, though: six of those 100 economists do expect a change on Wednesday, and nothing is settled until the statement lands.

Sources: WSJ · U.S. News · U.S. Treasury · Federal Reserve · our October 16 briefing

Lula Won Brazil's Runoff And The Premarket Quotes Disagree On What It Cost

Luiz Inacio Lula da Silva won Brazil's presidential runoff on Sunday, October 25, taking about 51.8% of valid votes to about 48.2% for Senator Flavio Bolsonaro. The unusual part is how he got there. Lula finished second in the first round, roughly 45% to Bolsonaro's 47%, making him the first candidate since Brazil resumed direct presidential elections in 1989 to lose the first round and win the runoff. It is his fourth term, not consecutive with the others. Bolsonaro has not conceded. His campaign asked for the result to be annulled over a two-hour extension of voting hours that both campaigns had requested.

U.S.-listed Brazilian shares fell hard in Monday's premarket session, before the exchange's official 9:30am open, and how far depends on which newsroom you read. Investing.com, quoting premarket prices at 5:10am ET Monday, had Petrobras down about 22% and the iShares MSCI Brazil exchange-traded fund, a basket of Brazilian stocks that trades as one share, down more than 27%. CNBC, reporting the same morning, had that same fund down nearly 20% overnight before paring the loss to 18%, and Petrobras down 21%. Both agree Petrobras was down more than 20%. Past that, they do not. Much of either number is a bet coming undone rather than a fresh judgment about Brazil. Investors had positioned for a Bolsonaro win: Brazil's currency, the real, had strengthened almost 5% against the dollar in the three weeks since the first round. The result went the other way, so those positions came off.

The gap between those two premarket quotes on the same fund on the same morning, Investing.com's more than 27% and CNBC's 18%, is the most useful thing here. Premarket trading is thin: very few shares change hands, so a handful of trades can set the price, and quotes taken minutes apart can differ by several percentage points. Put a household number on it. A $100 stake in that fund on Friday, in a classroom simulator or a real account, is about $73 at Investing.com's 5:10am quote and about $82 at CNBC's pared one, and nobody had either figure until 9:30am brought real volume. A price before the opening bell is a quote, not a verdict.

Sources: Investing.com · CNBC · CBS News · Al Jazeera

Moody's Spared France A Downgrade, And The Selling In French Debt Eased

Moody's did not downgrade France. On Friday, October 23, its scheduled review date, the agency kept France at Aa3, one of its higher grades, with the negative outlook it already carried, which flags a possible future cut. Markets had widely expected a cut. The reasoning came with conditions: the agency assumes France adopts a 2027 budget that narrows the deficit, the gap between what a government spends and what it collects, and that borrowing costs and social tensions ease somewhat. It warned that conditions are worse than it expected a few months ago and projects a deficit of 5.2% of national output next year. Prices responded on Monday: French government debt held up better than other euro-zone countries' when Europe opened, and contracts that fix its price ahead of time rose 0.6% in early trading.

The downgrade that did not happen had already been paid for. A credit rating is an opinion about whether a borrower pays its lenders in full and on time, and it lands on a calendar date, the way a scheduled inspection does. The price of the debt has no calendar. It moves every minute someone is willing to buy or sell, so anyone who believed a cut was coming had weeks to sell ahead of it. That is why France's borrowing cost reached a 24-year high last week, with the gap between what France and Germany pay to borrow near 180 hundredths of a percentage point, what traders call 180 basis points. When Friday's answer turned out to be no, there was less left to sell, and some of that selling pressure came off. Nobody quoted on it is calling the matter closed: commentators called the outcome a brief respite rather than a vote of confidence.

Sources: CNBC · Economic Times · Euronews · WSJ · our October 23 briefing

What To Watch

Every company figure below is analysts' average forecast for earnings per share, not a result.

Reporting today:

• Verizon (VZ), before the open: $1.27 expected against $1.21 a year ago.
• Seventy-four companies are expected in all, with the steelmaker Nucor after the close at $5.71 against $2.63.

Tuesday:

• The Fed's rate-setting committee begins its two-day meeting, and 178 companies are expected to report, among them Visa after the close at $3.43 against $2.98. Israel holds an election, and the European Central Bank meets later in the week.

Wednesday:

• The Fed's statement is scheduled for 2:00pm ET with a press conference half an hour later. Two hundred and twenty-three companies are expected, Alphabet and Microsoft among them after the close.

Thursday and Friday:

• The Bureau of Economic Analysis publishes Gross Domestic Product and Personal Income and Outlays on Thursday, the release that carries the inflation measure the Fed pays most attention to. Thursday is also the heaviest earnings day of the season at 322 companies, with Amazon after the close at $2.01 against $1.95. Friday brings ExxonMobil, Chevron and AbbVie before the open.

Further out:

• The U.S. midterm elections are on Tuesday, November 3.
• Brazil's own exchange has not set a closing price against Monday's pre-open quotes yet.
• Friday's level on the ten-year gets its next test when the Fed's statement lands.

The Classroom Takeaway

Ask a class what a price actually is. Two careful news organizations published different numbers for the same Brazilian fund on the same morning, and both were honest: a quote taken before an exchange opens is one willing buyer and one willing seller, not a market. Students can compare a quote with a close in Market Data.