Central Banks Are Unlikely to Hike Rates as Far as Investors Expect — Market Talk
1403 ET - As Treasury yields remain elevated, some Fed officials have been asked whether this means the market is doing some of the tightening for them. Tighter financial conditions mostly reflect expectations for higher policy rates, according to a note from Capital Economics. If central banks don't deliver them, tightening might be unwound. "We think that central banks are unlikely to hike interest rates as far as investors currently expect in the year ahead," the note says. Capital Economics says that's because energy prices may fall next year, therefore second-round effects will fail to materialize.([email protected])1358 ET - Gold futures post their third decline in four sessions as the U.S. dollar gains and buoyant U.S. yields keep a lid on demand for the metal with the market looking to the Fed minutes for interest-rate guidance. Earlier gains in oil prices had put pressure on precious metals, given the inflationary implications of higher energy costs. Front-month gold settles down 1.1% in New York at $4,113.80 a troy ounce and silver falls 2.1% to $59.899 a troy ounce. ([email protected])1313 ET - Mortgages with principal balances of $100,000 or less are becoming increasingly scarce, Realtor.com says. That's limiting financing options for buyers of lower-priced homes. Small mortgages represented more than 12% of all home loans originated in 2013 and 2014, but less than 3% in 2025 and 2026. The decline reflects both a shrinking pool of low-priced homes and persistent barriers to originating smaller loans. Small mortgages are most prevalent in lower-cost and rural areas. In 2025, Iowa had the highest share of small mortgages at 9.6%, followed by Wyoming at 8.6% and Mississippi at 8.5%. The borrowers using small mortgages don't appear to present weaker credit profiles. The median purchase price for homes financed with small mortgages was $109,681 in 2026. ([email protected])1213 ET - Gold futures are lower as the U.S. dollar gains and the market looks to minutes of the Fed's latest meeting to gauge prospects for interest rates. "A more hawkish reading, showing persistent concern over inflation and limited appetite for easier monetary policy, could lift Treasury yields and the U.S. dollar, increasing the opportunity cost of holding non-yielding gold and creating near-term downside pressure," Naeem Aslam, chief investment officer at Zaye Capital Markets says in a note. A more dovish interpretation "could pull real yields lower and strengthen demand for bullion." Gold for December delivery is down 1.3% in New York at $4,132.20 a troy ounce. Silver is off 2.3% at $60.16 a troy ounce. ([email protected])1139 ET - Recent buyers of Bitcoin used the cryptocurrency's latest price run-up to sell and lock in quick profits, according to an analysis by Glassnode. On Sunday, 86% of bitcoin that moved onto exchanges, a move that typically comes when a crypto asset will be sold, came from short-term holders, the analysts say. That's the highest level in more than a year, they say. If this kind of quick-profit selling continues, it will create a wall of supply at the $85,000 level that will be hard to push past, the analysts say. If Bitcoin slips into the $81,700 to $83,300 range, traders that made leveraged bets on the price to go up will have to sell to cover their losses, pushing the price even lower, the analysts say. ([email protected])1102 ET - Strength seen in altcoins — cryptocurrencies outside of bitcoin or stablecoins — has quickly faded in the early days of October, with most major cryptocurrencies posting big losses in morning trade. Altcoins are now amplifying losses seen in bitcoin, says analysts with Glassnode in a note. The firm attributes this to the leverage built up around many mid-cap and small-cap tokens, with these coins carrying open interest that is high in comparison to their total market capitalization — a sign of a potential unwind ahead, says Glassnode. Bitcoin falls 3% to $83,071, while ethereum is down 5.1% to $2,562, XRP drops 4.8% to $1.43, and solana is down 4.3% to $115.84. ([email protected])1056 ET - Power utilities will remain critical for the expansion of AI infrastructure despite the growing number of dedicated electricity generators being built near data centers, Joseph DeCampo, a managing director at investment bank Moelis & Company, says during an industry conference. "While they may start off as behind-the-meter or off-grid projects, data centers ultimately would like to be tied into the grid," DeCampo says. Data centers would be reluctant to rely on off-the-grid power installations alone partly because of their high reliability requirements, other panelists say. That puts utilities in the best position to benefit from surging demand for electricity to power AI systems, DeCampo says. "[Utilities] understand the grid better than anybody out there," he says. "They are the ones who ultimately benefit from the longer-term [power] trends." ([email protected]; @lhvgarcia)1050 ET - The macroeconomic signals seen in trading this week are taking a toll on major cryptocurrencies. "Today's sell-off looks macro-triggered but crypto-amplified," says Lacie Zhang of Bitget Wallet. Zhang cites new record-high Treasury yields and its corresponding push on the U.S. dollar as factors directly pressuring bitcoin and other digital assets--with overall investor sentiment favoring yield-bearing safe assets. Additionally, low trading volumes in crypto have made the moves look sharper, Zhang adds. Bitcoin falls by 3% to $83,098, ethereum is down 5% to $2,564, XRP slides 4.7% to $1.43, and solana is off 4.2% to $115.98. ([email protected])1046 ET - European bank shares fall on Wednesday as bonds sell off again and sour risk sentiment. The STOXX Europe Banks index is down 3.4%, reducing its year-to-date gain to 13%. Among the biggest losers, shares in Societe Generale fall 5.2%, Deutsche Bank is 4.8% lower, UniCredit loses 4.6% and Intesa Sanpaolo retreats 3.8%. "The head of the French central bank said that the ECB does not need to step in to stabilize French bonds, which is spooking investors and triggered this sell off," XTB's Kathleen Brooks says. France's budget talks and nationwide protests have made France the European focus of the selloff. A bond selloff cuts the market value of fixed income portfolios and increases borrowing costs. ([email protected])1004 ET - U.K. government bonds, or gilts, remain attractive as expectations for interest-rate rises by the Bank of England seem excessive, Insight Investment's Andy Burgess says in a note. "With inflation still elevated and the risk of second-round pressures increasing, we believe the Bank of England will ultimately be forced to deliver further rate hikes in the months ahead," he says. Even so, rates are unlikely to rise as much as financial markets currently expect, he says. As such, gilts are one of the most attractive opportunities across developed government bond markets, he says. Ten-year gilt yields rise 8.6 basis points to 5.457%, according to Tradeweb. ([email protected])0956 ET - The euro is unlikely to bounce back anytime soon due to concerns about France's public finances, Commerzbank's Antje Praefcke says in a note. "We've seen in recent days, amid concerns about France's national debt, just how quickly doubts about the credibility of governments can weigh on the euro."Presidential candidate Marine Le Pen has promised to get the budget deficit under control. However, fiscal consolidation in some eurozone countries is fundamentally difficult and politically unpopular, meaning the situation probably won't change fundamentally in the short to medium term, she says. The euro falls 0.7% to $1.1181 after hitting a 16-month of $1.1160 Monday, according to LSEG. ([email protected])0941 ET - Banks joining together to build a stablecoin will drive skeptical investors to trust the digital asset, Commerzbank's Poonam Ahuja says. A consortium of 37 European banks intend to launch Qivalis--the continent's first regulated euro-backed stablecoin--before the end of 2026. Investors wary of stablecoins worry about counterparty risk and operational challenges, Ahuja says at the Digital Assets Week conference in London. A joint approach will encourage investment in the digital asset, as well as widening its distribution, Ahuja says. Banks are well-trusted and can leverage that trust to increase stablecoin adoption, Ahuja says. ([email protected])