Dear Trader,
Last week, Kevin Warsh raised rates a quarter point. Andrew wanted a pause, got a hike instead, and he hasn't been shy about how he feels about it.
Now the OECD says that hike probably won't be the last. The Paris-based group bumped up its inflation forecasts for nearly every major economy and penciled in one more Fed hike before the year's out. Traders still can't agree on whether the Fed has one or two left in the tank.
That's bad news for anybody who spent the summer positioned for cheaper money. Mortgage rates and growth stocks priced for cuts would feel it first.
Andrew and Voz go live today to dig into what another hike could mean for your trades. They'll also hit the oil slide and this week's Trump-Xi meeting. Grab the live room link, put it on your calendar, and come find out whether Andrew thinks Warsh has more coming.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SIGN: Oil fell for a sixth straight session, and Brent (the global oil benchmark) closed under $100 a barrel Tuesday for the first time since September 8. Saudi Arabia restarted its East-West Pipeline after drone attacks shut it down on September 11. That line moves about 4 million barrels a day around the Strait of Hormuz, roughly 4% of global supply.
Iraq says it's shipping more too, and industry data showed US crude stockpiles rose 1.8 million barrels last week when analysts expected a drop. Then Trump threatened to "annihilate" Iran and, in the same breath, praised his envoys' talks with Iranian mediators. Oil traders spent the day pricing in the talks. If a deal actually lands, sub-$100 oil could get a lot cheaper.
SIREN: Xi Jinping comes to Washington this week for three days with Trump, and a former US diplomat already has a name for the vibe: "managed stalemate." The realistic trade win is an extension of the US-China truce that expires in November, plus some tariff relief on a narrow band of less sensitive goods.
AI looks even thinner. Treasury Secretary Scott Bessent pitched a system where each country gives the other a heads-up on AI moves. There's already a hotline for that, and one analyst says China has a habit of not picking up.
The guest list includes Jeff Bezos, Tim Cook, Sundar Pichai and Michael Dell, and Jensen Huang's expected at the state dinner. Watch what those CEOs announce after the handshakes.
SNEAKER: The OECD thinks inflation's sticking around longer than anyone budgeted for, and it's calling for one more Fed hike before the year's out. The Paris-based group raised its inflation forecasts for every G20 economy except China and Saudi Arabia.
The Fed, the ECB and the Bank of Japan already hiked within about a week of each other this month. The OECD expects more, though nothing like the 2022 pile-on after Russia invaded Ukraine. Traders are split on whether the Fed has one or two hikes left this year.
The sneaky part sits near the bottom: the OECD says AI returns could disappoint or show up late, and a miss could drag down valuations along with the engineering and construction firms building it all.