Over the past week, the situation in Yemen has escalated sharply, and tensions between the U.S. and Iran remain deadlocked, with both sides preparing for a possible resumption of hostilities, though Trump has explicitly ruled out any military action before the midterm elections. Meanwhile, the Federal Reserve’s meeting minutes and statements from multiple officials have conveyed a consistent message: although inflation remains elevated and another rate hike this year is possible, an increase in October is not necessarily imminent.
The U.S. dollar's upward momentum continues to strengthen, with the daily chart posting a four-day winning streak and marking its longest weekly gain in 21 months, as surging oil prices weigh on the currencies of energy-importing nations and global inflation concerns persist. A strong long-term Treasury auction partially eased selling pressure on U.S. bonds, ending a five-week rally in the 10-year yield, which peaked at 5.368% during the week—a new high since 2002.
Geopolitical risk premiums have dominated the movement of international crude oil prices. Iran has intensified attacks on tankers in the Strait of Hormuz, Houthi forces in Yemen are reportedly laying mines in the Bab el-Mandeb Strait, and hurricanes have disrupted crude oil production in the U.S. Gulf of Mexico, creating multiple bullish factors for oil prices. On Friday, oil prices plunged after Trump announced that Russia would immediately supply diesel to the U.S. and global markets; however, prices still ended the week higher.
Dual pressure from elevated U.S. dollar values and rising U.S. Treasury yields initially pushed international spot gold to its lowest level in two months this week. Subsequently, a decline in oil prices and bargain buying supported a rebound to the $4,200 per ounce level, resulting in a weekly gain of 1.33%. International spot silver also erased all of its weekly losses.
As investors reassessed reports on OpenAI's revenue growth, concerns about whether demand for AI can support massive infrastructure investments eased, leading to a swift rebound in U.S. large-cap tech stocks after Thursday's sell-off. The Nasdaq posted its fourth consecutive weekly gain, while the S&P 500 edged back toward its all-time high, rising over 1% for the week.
Here are the key points the market will focus on this week (all times in Beijing Time):
Central Bank Update: Why Is Wall Street Still Bullish on the Dollar Despite the Fed’s Reluctance to Consecutive Rate Hikes?
Federal Reserve:
- On Tuesday, Harker, 2026 FOMC voter and President of the Cleveland Fed, speaks; at 15:45 on Tuesday, Fed Governor Waller speaks at the Bloomberg New Economy Forum in India; on Wednesday at 04:00, Collins, 2028 FOMC voter and President of the Boston Fed, speaks; on Wednesday at 17:40, Fed Governor Bowman speaks; on Thursday at 02:00, the Fed releases the Beige Book on economic conditions; on Friday at 04:30, Harker, 2026 FOMC voter and President of the Cleveland Fed, speaks; on Friday at 11:30, Fed Chair Walsh attends the IMF Annual Meetings in Bangkok and participates in a fireside chat with IMF Managing Director Georgieva.
Other central banks:
- Tuesday at 8:30, the Reserve Bank of Australia releases the minutes of its September monetary policy meeting; Wednesday at 14:05, Bank of Canada Governor Macklem participates in a fireside chat at the IIF Annual Meeting in Bangkok; Wednesday at 16:30, ECB President Lagarde delivers a speech on Europe’s digital future; Friday at 10:00, Bank of England Governor Bailey participates in a fireside chat; Friday at 12:15, Bank of Canada Governor Macklem attends the IMF Annual Meeting and participates in a panel session; Friday at 14:30, Deputy Governor of the Bank of Japan, Shinichi Uchida, delivers a speech.
Federal Reserve officials are set to enter a quiet period, preceded by a surge of recent comments. Signals from officials recently suggest that, although further rate hikes may still be needed this year, they are not in a rush to tighten policy at consecutive meetings. Market expectations for another rate hike in October have weakened, with focus now shifting to a potential next move in December.
The minutes from the Federal Reserve’s meeting on September 15–16 indicated that most officials believed another increase in the federal funds rate before the end of the year could be appropriate. However, officials differed in their reasoning for rate hikes: some were more concerned about the risk that supply shocks, such as rising energy prices, could continue to push inflation higher, while others worried that strong demand and economic growth were generating broader inflationary pressures.
The minutes also emphasized that future meetings will maintain an open stance, with policy decisions contingent on new data and its impact on the economic outlook and the balance of risks.
On October 8 in Istanbul, Waller stated that if economic data aligns with expectations, further rate hikes could help bring inflation back to the 2% target more promptly. However, he noted that rate hikes do not need to occur at consecutive meetings, as long as they are completed within an appropriate timeframe.
This statement aligns with recent remarks from other Federal Reserve officials. Prior to this, Vice Chair Jefferson and New York Fed President Williams each indicated that there was no need to rush another rate hike after the September action, and that it would be prudent to wait for more information.
St. Louis Fed President穆萨莱姆 said that further monetary tightening will still be necessary to bring inflation back to target in a timely manner. He believes that interest rates may need to continue rising over the next six to nine months.
Meanwhile, Trump has renewed efforts targeting Fed Governor Cook, establishing a committee to investigate allegations that she made false statements in housing loan documents and demanding her appearance at a White House hearing on November 5. This development once again brings into focus the Federal Reserve’s policy independence and the president’s authority over the appointment and removal of governors. If Trump decides to remove her following the hearing, the decision could once again enter the judicial process.
The controversy surrounding Cook's dismissal occurs against the backdrop of continued White House attention to central bank policy. Although this action will not immediately alter the committee’s interest rate decisions, the investigation process may continue to test market confidence in the Federal Reserve’s independence.
Compared to other major economies, the United States has more room to withstand further rate hikes, providing additional support for the dollar. Francesco Pesole, FX strategist at ING, wrote in a report that global bond markets and risk sentiment remain fragile, and the Fed’s statements have convinced markets that a rate hike in December is likely, maintaining a relatively strong dollar outlook in the short term.
CFTC data as of October 6 shows that asset managers and non-commercial speculators continued to increase their long positions in the U.S. dollar, with bets on a stronger dollar exceeding $35 billion.
Brent Donnelly, President of Spectra Markets, remains bullish on the U.S. dollar in the short term, expecting the surge in AI capital expenditures to continue attracting capital inflows into the U.S., boosting inflation and nominal economic growth.
Adam Turnquist, Head of Multi-Asset Strategy at LPL Financial, stated that the U.S. Dollar Index has broken out of a double-bottom pattern and surpassed its June high at 101.75, confirming the continuation of a bullish trend. If the U.S. Dollar Index breaks above 102.86, the upside potential could reach 107.
Key data: If CPI comes in neither surprisingly cold nor hot, gold may continue to stagnate.
- Monday, 14:00: Foreign ministers of EU member states meet in Luxembourg to discuss the Russia-Ukraine conflict, developments in the Middle East, and the security implications of further EU expansion; Monday, TBA: IMF and World Bank Annual Meetings in Bangkok, continuing until the 18th; Tuesday, 18:00: U.S. NFIB Small Business Optimism Index for September; Tuesday, 20:15: U.S. ADP Employment Change for the week ending September 26; Tuesday, 21:00: Apple holds a launch event for new smart home products in New York; Tuesday, 22:00: U.S. Existing Home Sales for September, annualized; Tuesday, TBA: OPEC releases its monthly oil market report; Wednesday, 09:30: China’s CPI year-over-year for September; Wednesday, 16:00: IEA releases its monthly oil market report; Wednesday, 20:30: U.S. CPI and Core CPI for September; Thursday, 04:30: U.S. API Crude Oil Inventories for the week ending October 9; Thursday, 08:30: Australia’s seasonally adjusted unemployment rate for September; Thursday, 14:00: UK monthly GDP for August (3-month), UK monthly manufacturing output for August, UK monthly industrial output for August; Thursday, 17:00: Eurozone monthly industrial output for August; Thursday, 20:30: Canada monthly wholesale sales for August; Thursday, 20:30: U.S. initial jobless claims for the week ending October 10, U.S. retail sales for September, U.S. PPI and Core PPI for September, U.S. NY Fed Manufacturing Index for October, U.S. Philly Fed Manufacturing Index for October; Thursday, 22:00: U.S. business inventories for August; Thursday, TBA: Domestic refined oil prices to open a new adjustment window; The National Energy Administration releases total electricity consumption data around the 15th of each month; Thursday, TBA: G20 Finance Ministers and Central Bank Governors Meeting; Friday, 00:00: U.S. EIA Crude Oil Inventories for the week ending October 9; Friday, 17:00: Eurozone final CPI year-over-year and month-over-month for September; Friday, 20:30: U.S. import price index month-over-month for September; Friday, 21:15: U.S. industrial production month-over-month for September.
The U.S. September CPI inflation data will be released on Wednesday, and investors will use it to assess the likely timing of the Fed’s next interest rate hike.
Following weak U.S. employment data and statements from several Federal Reserve policymakers indicating there is still time to wait before another rate hike, market pricing, according to LSEG data, now reflects only a 19% probability of an increase on October 28—down from as high as 70% previously. However, the market fully expects the Fed to raise rates by 25 basis points in December.
James Knightley, Chief International Economist at ING, stated in a report: “Only an ‘exceptionally strong CPI report’ could alter market expectations that rates will remain unchanged in October. Given the significant increases in gasoline prices and airline ticket fares, this is not impossible. However, we still expect the Fed to wait until December before raising rates.”
Natixis believes that the CPI data is likely to align with market expectations, and the unexpected inflation in August was a one-time anomaly driven by temporary increases in certain components, which will not recur; this month’s core inflation data will reflect the trend of inflation gradually returning to normal.
Economists Christopher Hodge and Selin Aker at the bank stated that the August inflation data did not undermine the bank’s optimistic outlook for declining inflation, and they expect inflation to continue falling over the coming quarters. They anticipate that the Federal Reserve will hold rates steady at its October meeting, both to allow time to assess economic indicators further before the December meeting and to avoid the political controversy of raising rates just before the mid-term elections in early November.
Natixis believes that the Federal Reserve's current tightening cycle may involve only one more rate hike, but it also acknowledges that monthly inflation data has been volatile and difficult to sustainably improve. Therefore, the bank still maintains the scenario that another rate hike could occur in December or January next year.
Although gold has withstood multiple headwinds, downside risks remain, and the inflation data to be released next week will be particularly crucial.
Lukman Otunuga, Senior Market Analyst at FXTM, stated that only a significantly higher-than-expected inflation reading would force the Fed to raise rates this month. On the technical side, if gold price remains below $4,200, the next targets are $4,100 and $4,000; if it holds above this resistance level, gold could challenge the 100-day moving average near $4,260 and $4,300.
Marc Chandler, Managing Director of Bannockburn Global Forex, warned that gold has faced selling pressure each time it rose above $4,200 intraday; a sustained hold above $4,230 would confirm a bottom.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, predicts that gold prices will likely remain range-bound next week, while this week’s rebound from below $4,100 has been encouraging. On one hand, high macroeconomic risks weigh on gold prices; on the other hand, these same risks are driving capital into gold, with gold ETFs maintaining inflows for several consecutive weeks.
In the medium to long term, he is bullish on gold, based on two scenarios: First, high borrowing costs will eventually weigh on the economy; highly leveraged sectors will expose risks, leading to economic slowdown or recession, which will increase demand for U.S. Treasuries, lower real yields, and prompt monetary easing—benefiting gold prices. Second, if economic resilience remains strong, high yields will intensify fiscal pressures on governments; many countries’ debt levels already exceed annual GDP, and the burden of debt servicing may force policy intervention in bond markets. If such intervention undermines currency credibility, demand for gold as a store of value will rise.
Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, holds a neutral view, believing that the next major turning point for gold will likely be influenced by changes in geopolitical conditions: “Unless we see some significant shift, I think we’re just going in circles for now.”
Key Event: U.S. and Russia Reach Diesel Supply Agreement; Analysts Say It’s Unlikely to Fill Global Shortfall
On Friday local time, Trump announced that he had reached an agreement with Russian President Putin, under which Russia will immediately supply diesel to the U.S. market, effectively easing U.S. energy sanctions against Russia. The Kremlin issued a statement saying that during a phone call with Trump, Putin expressed willingness to increase global supplies of oil and other fuels.
Following Trump's announcement, the U.S. Department of the Treasury immediately stated that it would lift sanctions on Russian diesel exports, allowing Russian diesel to enter global markets, and issued a general license to Russian energy companies valid until April of the following year.
Russia is a global core supplier of diesel. Previously, Ukraine has consistently targeted Russian oil refining and fuel infrastructure, prompting Russia to extend its diesel export ban until the end of October. Supply shortages have driven up fuel prices, just ahead of the U.S. midterm elections. Trump previously criticized Ukraine’s strikes for pushing up oil prices.
According to the supply volume disclosed by Trump on social media: Russia will immediately supply 300,000 tons of diesel to the United States and global markets; an additional 500,000 tons in November; followed by another 1 million tons; and subsequently, up to 3 million tons of diesel will be delivered in the short term, depending on refinery conditions. Trump thanked Putin during a White House press conference, stating he was pleased to receive this diesel shipment.
Edward Fishman, Senior Fellow at the Council on Foreign Relations, doubts Russia’s ability to fulfill its commitments. He notes that Russia initially imposed a diesel export ban precisely because Ukrainian strikes had damaged refining capacity, forcing domestic fuel rationing. He views this as a typical Putin strategy—using empty promises to divide the transatlantic alliance.
Ukrainian President Zelensky strongly criticized the diesel agreement on Friday, as Ukrainian negotiators were meeting with U.S. officials in Florida to discuss a potential Russia-Ukraine ceasefire deal. Zelensky stated that the agreement would provide funding to Putin, enabling him to wage a more aggressive war. Trump dismissed Zelensky’s criticism.
Kevin Book, Managing Director at ClearView Energy Partners, analyzed that even if Russia delivers in full, this volume remains small relative to global diesel demand. Diesel is widely used in trucks, ships, agricultural machinery, and generators, with global daily consumption of diesel and related fuels totaling approximately 30 million barrels. According to estimates, additional supply in October is around 72,000 barrels per day, rising to about 124,000 barrels per day in November, and subsequently ranging between 240,000 and 720,000 barrels per day; Russia’s diesel exports are projected to reach 800,000 barrels per day in the final three months of 2025. Book noted that the incremental supply is limited and would only have a modest impact on prices, insufficient to offset the global supply shortfall.
Company earnings: U.S. third-quarter results kick off next week; rising U.S. Treasury appeal may not necessarily trigger portfolio rebalancing?
Earnings season will kick off next week with major banks, as JPMorgan (JPM.N), Goldman Sachs (GS.N), Citigroup (C.N), and Wells Fargo (WFC.N) are scheduled to report on Tuesday, while Bank of America (BAC.N), Morgan Stanley (MS.N), and BlackRock (BLK.N) will release their results on Wednesday.
Corporate profits will become a key支撑 for the stock market. FactSet expects S&P 500 companies to report year-over-year profit growth of approximately 29.5% and revenue growth of about 12.3% in the third quarter. If these expectations are met, it would mark the third consecutive quarter with profit growth exceeding 25%. The S&P 500 has already achieved double-digit profit growth for seven consecutive quarters.
Investors are not only focused on bank profitability but also on the impact of higher interest rates and energy costs on consumers and capital market activity. Matt Stucky, Chief Investment Portfolio Manager at Northwest Mutual Wealth Management, said the market needs to observe how rising interest rates transmit to capital markets and consumer spending, particularly whether consumers can withstand the pressure from rising energy prices.
Recent performance of bank stocks has lagged behind the broader market. Over the past month, the S&P 500 Bank Index has declined 7.5%, with rising U.S. Treasury yields being one factor pressuring related stocks. Matthew Miskin, Co-Chief Investment Strategist at Manulife John Hancock Investments, said that if financial institutions deliver strong earnings, the market may breathe a sigh of relief.
Important earnings reports are also being released in the semiconductor industry. ASML will report earnings on Wednesday, while TSMC will release its results on Thursday. Orders, demand, and guidance from both companies will provide new insights into the health of the chip industry and AI-related investments.
Jim Cramer, host of CNBC’s long-running financial program “Mad Money” and a former hedge fund manager, said that if ASML raises its guidance and confirms robust demand, investors should consider semiconductor equipment stocks such as Lam Research (LRCX) and Applied Materials (AMAT). Regarding TSMC, he believes that a strong earnings performance could significantly boost chip stocks.
However, even if the earnings report as a whole is strong, U.S. equities may still face valuation pressure if inflation data reignites expectations of further rate hikes or if long-term U.S. Treasury yields continue to rise. Previously, markets worried that a 5% yield might dampen performance, but this concern proved unfounded; investors are now shifting their focus to the potential risks of the 10-year Treasury yield reaching 6%.
Dan Ivascyn of Pimco told the Financial Times this week that if highly leveraged investors are forced to liquidate losing positions amid sustained selling pressure, the 10-year U.S. Treasury yield could reach 6%.
Dustin Reid, Chief Fixed Income Strategist at Mackenzie Investments, said there is a possibility that yields could naturally rise to 6%, but this is not his base case; strong market demand and a robust U.S. Treasury auction this week have limited further upward pressure on yields.
On Friday, the 10-year U.S. Treasury yield remained stable around 5.25%, while the 30-year U.S. Treasury yield held at 5.6%. Reed noted that these yield levels are sufficient to attract long-term capital from sovereign wealth funds, central banks, pensions, and other investors seeking liability matching. He also mentioned that if oil prices remain elevated, AI capital expenditure momentum continues, and the U.S. economy maintains resilience, a rise in the 10-year U.S. Treasury yield to 6% would also be reasonable.
Harley Bassman, a veteran of the bond market and the creator of the MOVE index, which measures U.S. Treasury volatility, stated during a conference call that he did not predict specific levels for the 10-year yield. However, based on the $2 trillion U.S. fiscal deficit and the substantial capital expenditures by major cloud providers investing in data center construction, he maintains his view that interest rates will remain higher for longer.
Bassman also noted that a large amount of capital is passively allocated to stocks through target-date funds, and this "passive automatic allocation" mechanism means investors are unlikely to adjust their holdings even if bonds become more attractive.
Market Closure Reminder:
- On Monday, Canadian markets were closed for Thanksgiving; Japanese markets were closed for Sports Day; and the U.S. bond market was closed for Columbus Day.
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