🚨 BEFORE MARKETS OPEN MONDAY, LOOK AT WHAT THE FED IS FACING Markets reopen Monday after another warning from the inflation data September CPI rose 3.7% from a year earlier, up from 3.4% in August Prices jumped 0.6% in a SINGLE MONTH The Fed already raised rates to 3.75% to 4% in September Its next decision comes on OCTOBER 28 And the choices are getting harder If inflation stays hot, FURTHER TIGHTENING remains a risk That would keep pressure on borrowing costs, corporate profits and companies that need to refinance The US government faces the same financing problem on a much larger scale FEDERAL DEBT IS ABOVE $40 TRILLION As cheaper debt matures, replacing it at higher yields adds to the interest bill That pressure builds over time But cutting rates before inflation is under control carries another risk If investors become less confident that inflation will come down, they can demand higher yields to lend for 10, 20 or 30 years The Fed can cut its overnight rate while LONG-TERM BORROWING COSTS STAY PAINFULLY HIGH That is why I’m watching the bond market The 10-year Treasury yield is STILL ABOVE 5% The Benner chart marks 2026 as a year of HIGH PRICES AND SELLING I’m watching the inflation and bond data alongside it Japan has already seen its 30-year yield hit a RECORD 4.235% earlier this month Now Japan heads into another ¥700 billion 20-year bond auction on Tuesday Demand will show what price investors are willing to accept for holding that debt Meanwhile, the New York Fed has up to $5.48 BILLION in Treasury bill purchases scheduled next week, starting Monday Those purchases are PLANNED REINVESTMENTS of principal repayments They do not mark the start of a rate-cutting cycle The risk to watch is a renewed rise in long-term yields while earnings or growth expectations weaken That combination can hurt stocks and long-dated bonds TOGETHER If leveraged investors then face margin calls, selling can spread to otherwise unrelated assets, including gold and Bitcoin Falling prices → Margin calls → FORCED SELLING → More pressure That is a scenario to monitor as the next Fed meeting approaches A green candle won’t tell you whether refinancing has become cheaper WATCH THE YIELDS Follow and turn notifications on for updates