By Mike Dolan
Oct 28 (Reuters) – Much of this week’s busy event calendar gets packed into the next 24 hours.
The day ahead includes the Federal Reserve’s expected “hawkish hold”, a possible Bank of Canada rate hike, AI hyperscaler earnings from Microsoft and Alphabet after the bell, and even Britain’s annual government budget.
The mood going into the barrage of news on Wednesday was buoyant, with AI stocks rallying further on Tuesday and South Korean chip giant SK Hynix surging 10% overnight after reporting a tripling of net profit over the past year, while planning to give a whopping $75 billion back to shareholders.
The interest rate market was calm as the Fed decision loomed, with all the focus now on how Chair Kevin Warsh couches a likely pause in rate rises – as well as any indications of another hike by year-end. The number of policymaker dissents to a decision to hold may be key in that regard.
With both inflation above its 2% target and unemployment below 5% for more than five years now, the Fed needs to recalibrate what it considers “neutral”, as both headline and core annual rates of inflation are rising again and financial conditions remain relatively loose.
The Bank of Canada is expected to hike for the first time in three years, however.
One possible shot across the bow there came from the other side of the world overnight, with New Zealand’s central bank narrowly voting to keep its rates steady despite widespread expectations of another hike. That sent the kiwi dollar down more than 1%.
There’s little reason for relief on energy prices, however, as Brent crude continues to push above $115 per barrel, with reports that the US is considering resuming attacks on Iran after next week’s midterms.
Elsewhere, Britain’s usually anxious annual budget set piece has been defused somewhat by finance minister John Healey’s signalling that no major changes to the government’s tax, spend or borrowing programme are afoot.
To those outside the countries in question, any national budget can appear “boring”, but this one is being deliberately billed as such.
CHART OF THE DAY
This year’s Iran war has taken its toll on global energy prices and regional economies, but the damage to Iran’s economy itself has been building for a decade and the Iranian rial has been in freefall for most of that time.
Qatari mediators presented Iran with a new draft deal on Sunday to end the war with the US and Israel, and Tehran is expected to send a response to the draft by the end of the week.
President Trump, meantime, repeated threats to strike Iran again after next week’s midterm elections, while Iranian officials said Tehran had drawn up detailed plans to attack Gulf undersea cables if those attacks resume.
Today’s events to watch
• Federal Reserve interest rate decision (2 p.m. EDT), Chair Kevin Warsh’s press conference (2:30 p.m. EDT)
• US corporate earnings: Alphabet, Microsoft and others
• Bank of Canada interest rate decision (9:45 a.m. EDT)
• UK annual budget (8:30 a.m. EDT)
Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Comments