The Federal Reserve raised its benchmark interest rate to a range of 3.75% to 4% on September 16, citing elevated inflation. While Chair Kevin Warsh cautioned against basing policy on individual data points, traders are pricing roughly a 64% chance of another rate hike at the Fed's October 27-28 meeting.
Five economic releases this week will feed into that decision, with ripple effects across Treasury yields, equities, and cryptocurrencies. Higher interest rates typically divert capital from riskier assets like technology stocks and Bitcoin, which currently trades near $84,728.
Monday: Bank of Japan Monetary Policy Minutes
The Bank of Japan will publish minutes from its July 30-31 meeting. The BOJ raised rates to approximately 1% in June and again to roughly 1.25% on September 18. With Japan's rate sitting more than 2.5 percentage points below the Fed's, any signals of faster hikes could narrow the rate differential and ripple through global bond markets, affecting Japanese government bonds, the yen, and US Treasury yields.
Wednesday: PCE Inflation and GDP
The Personal Consumption Expenditures (PCE) index—the Fed's preferred inflation measure—will reveal August data. Core PCE rose 3.3% year-over-year through July, with August forecast at 3.4%, well above the Fed's 2% target. Consumer spending is projected to climb 0.5% monthly, potentially the largest increase in over a year.
The same morning, the Bureau of Economic Analysis releases its final estimate of second-quarter GDP growth. The second estimate showed 1.5% annual growth, down from 2.1% in the first quarter. A stronger revision could give the Fed additional justification for maintaining higher rates.
Thursday: ISM Manufacturing Index
The Institute for Supply Management surveys factory purchasing managers monthly. August's index stood at 54.6, down from 55.6 in July, indicating continued but slowing manufacturing growth. The prices component remained elevated at 71.1, reflecting persistent cost pressures in the industrial sector.
Friday: September Jobs Report
The week concludes with the September employment report. Forecasters anticipate approximately 90,000 new jobs, a significant decline from August's 162,000. Unemployment is expected to remain steady at 4.1%. Hourly wages grew 0.3% in August. A stronger-than-expected report would reinforce arguments for continued rate increases by demonstrating labor market resilience.
Together, these releases will shape expectations ahead of the Fed's October decision and influence Treasury yields, which recently retreated from a 19-year high.
