
New York Fed President John Williams backed another interest rate hike before end-2026 but was reluctant to endorse the market’s pricing for further tightening in 2027. Ahead of today’s US CPI release, Williams reminded markets that the Fed remains “data dependent” and not “data-point dependent”. Monetary policy will be guided by the underlying inflation trajectory over the next 1-2 years, rather than individual data releases.
Against this backdrop, today’s US CPI report should be judged less by the expected acceleration in headline inflation to 0.6% MoM in September from 0.4% in August, but more by the anticipated moderation in core inflation to 0.2% from 0.3%. Williams believes that disinflationary forces remain intact, with price pressures largely concentrated in AI and energy rather than spreading across the broader economy. He sees little evidence of labour market-driven inflation or an overheating US economy.
This distinction matters for the USD, whose rally since the September 16 Fed hike has relied heavily on expectations of further tightening. The DXY Index fell 0.4% to 102.2 overnight, reversing Monday’s gains. The US Treasury 30Y yield also declined 3.9 bps to 5.557%, its lowest close since September 29.
Quote of the Day
“When I was picked to fly the X-1, it was my duty to fly it, and I did.”
Chuck Yeager
Today in history
On October 14, 1947, U.S. Air Force Captain Chuck Yeager became the first person to break the sound barrier in level flight aboard the Bell X-1 rocket plane.



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