Fed's Goolsbee: Rates' Ultimate Settling Place Fair Bit Below Current Levels — Market Talk
0901 ET - Chicago Fed president Austan Goolsbee says the ultimate settling place for interest rates is a someplace a fair bit below where we are now. In an interview published by Semafor, Goolsbee says rates can come down if the Fed gets evidence that inflation is on a path back to 2% with full employment. "But the more you see services inflation going up and the more you see AI demand jumping out of its lane and overheating the rest of the economy, then it's going to be a little dicier," he says.([email protected])0855 ET - Easing crude prices and a weaker U.S. dollar are giving bitcoin support--with the token up 0.3% to $83,275, according to LSEG data. But there's other key sources of support that are missing, says Dat Tong of Exness in a note. "The rebound lacks strong institutional support," says Tong. "Spot Bitcoin ETFs recorded USD 65 million in net outflows on Monday, taking October flows to negative USD 451 million." Demand has been an issue for bitcoin on both the retail and institutional sides, exaggerating price movements due to the low volumes being traded but providing little lasting momentum for bitcoin in either direction. Ethereum falls 0.7% to $2,501, and XRP is down 0.5% to $1.36. ([email protected])0850 ET - Treasury yields bounce from early lows but remain below Friday levels, as U.S. bond markets start a shortened week bracing for key inflation data. September CPI, due tomorrow, is expected to accelerate, with annual inflation at 3.6%, up from August's 3.4%. Markets still price a Fed hold this month, however. Oil slips 2%. Declining yields and oil prices weigh on the dollar. The WSJ Dollar Index falls 0.2%. The 10-year Treasury yield falls to 5.189% from 5.243% Friday. The two-year slips to 4.778% from 4.789%. ([email protected]; @ptrevisani)0742 ET - Sterling requires a fresh positive catalyst to build upward momentum versus the dollar as the prospect of the Bank of England raising interest rates is priced in, XS.com's Simon-Peter Massabni says in a note. Further warnings from BOE policymakers about higher inflation might only be enough to keep sterling within its current range versus the dollar, he says. Sterling continues to face broad-based dollar strength due to expectations the Federal Reserve will raise rates further. The next point to watch is whether upcoming data changes the balance of expectations between the BOE and Fed, he says. U.S. inflation data are due Wednesday followed by U.K. August growth figures on Thursday. Sterling rises 0.3% to $1.3239. ([email protected])0655 ET - National frameworks for regulating global stablecoins remain untested in times of severe stress and insolvency, an international body monitoring financial stability says. Stablecoins are digital tokens pegged to the U.S. dollar or other currencies. "The interaction of regulatory frameworks across borders remains uncertain or undefined in many jurisdictions, including regarding the treatment of foreign-issued stablecoins," writes Bank of England governor and Financial Stability Board chair Andrew Bailey. He adds that global stablecoin arrangement may operate across multiple entities and regulatory regimes, while mechanisms for crisis management in times of stress or insolvency remain immature. ([email protected])0653 ET - Investor expectations for a boom, or above-trend growth combined with above-trend inflation, in the global economy reached the highest level in more than four years in October, according to Bank of America's global fund manager survey. A net 47% of investors expect a boom in the next 12 months, up from 38% in September and the most since February 2022. However, a net 45% of investors expect stagflation, or below-trend growth combined with above-trend inflation, albeit down from 50% in September. ([email protected])0620 ET - The Korean won and Taiwanese dollar are among Asia's worst-performing currencies as the benchmark Kospi and Taiex lead regional equity markets lower, weighed by a selloff in chip stocks. The Philadelphia Semiconductor Index fell 2.7% overnight. "In our view the dominant theme was a memory selloff," Saxo Bank says in a note. South Korean memory-chip giants Samsung Electronics and SK Hynix slumped 7.4% and 10%, respectively, dragging the Kospi down 5.5%. Taiwan's Taiex shed 1.9% as index heavyweight TSMC, the world's largest contract chip maker, lost 2.0%. The U.S. dollar rises 0.3% to 1,339 won, on track for its strongest daily gain in nearly two weeks, according to LSEG. The dollar climbs 0.7% to NT$32.15, on course for its biggest advance in more than seven months. ([email protected])0618 ET - The dollar continues to be viewed as overvalued in October's Bank of America global fund manager survey. A net 36% of investors say the dollar is overvalued this month, compared to 37% a month ago. Meanwhile, a net 8% of investors say the euro is overvalued, compared to a net 3% saying it was undervalued in September. A net 3% think sterling is overvalued, down from 13% last month.([email protected])0617 ET - Inflation expectations have fallen this month to their lowest level since January 2025, Bank of America's global fund manager survey shows. A net 5% of investors in October expect lower global inflation in 12 months' time, compared to 4% in September. This reflects expectations that Brent crude prices will ease by year-end to $94 a barrel from $104 currently. ([email protected])0616 ET - Investors increased allocations to bonds in October, according to Bank of America's monthly global fund manager survey. They also find that pessimism on bond yields fell to the lowest since May 2025. "Just net 1% of FMS [fund manager survey] investors expect higher long-term rates, down from 15% in September," the survey finds. Investors have also increased allocation to Japanese and U.K. stocks, as well as utilities, the survey says. They reduced allocation to banks, U.S. stocks and consumer discretionary. ([email protected])0615 ET - The cost of insuring euro-denominated credit against default rises amid a fresh selloff in AI-related and technology stocks, even as oil prices fall. "Investors are increasingly worried that cracks are starting to show in the AI trade," says AJ Bell's Dan Coatsworth in a note. "There are growing fears that companies are investing so much money into AI without a clear idea of the timing or scale of financial payback," he says. The iTraxx Europe Crossover index of euro high-yield credit default swaps rises 2 basis points to 313bps, S&P Global Market Intelligence data show. ([email protected])0614 ET - Investors have turned negative on the global growth outlook in October, according to Bank of America's latest global fund manager survey. A net 4% of investors now expect the economy to weaken over the next 12 months. That compares to a net 8% of investors expecting a stronger economy in the September survey. ([email protected])