Interest rates keep rising: Fed minutes and the case for further increases

The speaker reports that the September (month 9) FOMC minutes showed that all 19 participants supported the first 0.25% increase in 3 years, that some considered additional increases in 2026 appropriate, and that the market is pricing in roughly an 80% probability of an October (month 10) increase. Governor Waller left open the possibility of further increases in remarks in Istanbul, while Williams and Jefferson favor taking time to assess developments, making the CPI release on the 14th next week a turning point, according to the speaker. The speaker says that interest rates continued rising while the Nasdaq and S&P fell for two consecutive days after reaching record highs, and that oil prices rose 5% on reports that airstrikes against Iran were under consideration, adding upward pressure on interest rates. The speaker reports that gains are narrowly concentrated, with technology stocks rising 5.6% over a month while financial stocks fell 7.2%, and says the auction of 30 year bonds worth 220 hundred-million dollars and the effects of buybacks warrant attention. The speaker argues that curbing the AI capital expenditure cycle would require raising rates enough for mortgage rates to reach 10%, making monetary policy a blunt instrument the Fed cannot use for that purpose. The speaker questions whether America's exorbitant privilege will endure amid rising French and Japanese government bond yields and the unwinding of carry trades, and says that after the midterm elections, the United States will also have to address fiscal questions like France's reduction of 1,250 hundred-million euros. All directional outlooks are the speaker's conditional judgments, not definitive predictions of short-term prices.