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| MARKETS — as of Oct 8, 6:24 AM ET |
Equity futures S&P7,821-0.40% Nasdaq31,221-0.58% Dow51,044-0.79% Rates 2-Year4.82%+6 bps 10-Year5.35%+7 bps SOFR3.90%+1 bps Credit & risk High Yield3.03%-9 bps Crude91.90+4.10% Bitcoin$82,896-0.46%
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Thursday, October 8 · Lead Federal Open Market Committee members believe they may need to raise funds target again Most members of the Federal Open Market Committee (FOMC) believe they may need to raise the federal funds target a second time before year-end, with the decision dependent on further information, minutes of the September 15-16 meeting released October 7 show. Treasuries kept selling off: the 10-year Treasury yield rose about 6 basis points to 5.34 percent before Thursday's open, above Monday's 5.31 percent close and a level no daily close has reached since April 2002. Policymakers were divided over the logic of the September increase, Reuters reported. The 2-year yield stood at 4.82 percent. | ▸ | Waller's October 8 speech: Governor Christopher Waller said the September increase, which took the target range to 3.75 to 4.00 percent after nine months on hold, rested on a preponderance of evidence gathered over several months rather than on a single data point. He cited a strengthened labor market, energy prices lifted by Middle East conflict, AI-driven price increases in high-tech consumer goods and trade conflicts. Core PCE (personal consumption expenditures) inflation has run between 2.5 and 3.0 percent since spring 2024, he noted. American Banker reported that he expects the committee to raise rates again if inflation shows no signs of easing. Reuters reported he sees flexibility on the pace. |
| ▸ | Market stress, household signals: Reuters reported that the minutes show some officials want to prepare for market stress. The New York Fed's September survey found consumer inflation expectations rising at the short- and medium-term horizons; longer-term expectations held steady. Consumer credit grew at a 1.9 percent seasonally adjusted annual rate in August, the Fed reported October 7, as nonrevolving credit rose 4.1 percent. Revolving credit, largely card balances, fell 4.2 percent. |
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REGULATORY DEVELOPMENTS The Office of the Comptroller of the Currency (OCC) has answered the states' escrow challenge with a motion to dismiss. Treasury's first outbound investment penalty and a reported federal housing inquiry into Wells Fargo carried enforcement into investment notification and civil rights questions; the Comptroller also gave community banks a new way to report fraud. | ▸ | Escrow preemption, the OCC's motion: The OCC has moved to dismiss the multistate suit challenging its mortgage escrow preemption actions. Its motion pairs a merits argument with three procedural routes: dismissal, transfer or a pause. The escrow determination, effective June 18, covers national banks and federal savings associations, not state-chartered banks or their fintech partners. The Supreme Court's October 5 call for the Solicitor General's views leaves the three escrow petitions unresolved. The motion was reported October 7. |
| ▸ | Outbound investment, first penalty: Treasury announced on October 7 its first civil penalty under the Outbound Investment Security Program, in effect since January 2, 2025: $200,000 against Amidi, LLC. Amidi's Chinese subsidiary invested in Shanghai Qiongche Intelligent Technology (Noematrix), an AI company, on April 19, 2025, without the notification the program requires U.S. persons to file for their controlled foreign entities. The program prohibits some U.S. investments in quantum computing, AI or semiconductor firms tied to China, Hong Kong or Macau, and it requires notice of others. Banks with private equity, merchant-banking or wealth arms that own foreign subsidiaries carry the same notification duty. The unreported stake was about $92,478. |
| ▸ | Housing and Urban Development (HUD) inquiry into Wells Fargo: American Banker reported that the Trump administration says Wells Fargo's past efforts to prioritize mortgage aid for minority borrowers may have violated the Civil Rights Act. Lenders that ran similar race-conscious assistance programs could face the same question. No penalty or finding has been reported. |
| ▸ | Comptroller's fraud tool: Comptroller Jonathan Gould unveiled a tool on October 6 for community banks to report payment fraud, American Banker reported. The OCC tied the tool to new efforts against financial fraud in Minnesota; the coverage did not describe how the agency will use the reports. Gould convened community bankers in Minneapolis. |
INDUSTRY AND AI SIGNALS | ▸ | Crude, the Iran reports: Crude rose about 4 percent to near $92 a barrel before Thursday's open. Bloomberg reported that the White House has asked the Pentagon for Iran strike options that could be used before next month's midterms, citing The Atlantic. Reuters' Morning Bid tied the climb in bond yields to the minutes, with investors demanding more compensation for long-term debt. S&P 500 futures fell about 0.4 percent; the high-yield spread, the premium risky borrowers pay over Treasuries, narrowed about 9 basis points to 3.03 percentage points. SOFR, the overnight funding rate, was 3.90 percent. |
| ▸ | Bank deals, five states: Houston-based Third Coast agreed to buy an Oklahoma bank for $240 million, about a year after its $123 million purchase of Austin's Keystone Bancshares, Banking Dive reported. TowneBank of Virginia agreed to acquire BlueHarbor Bank, its fourth North Carolina bank, deepening its Charlotte footprint. ABA counted proposed acquisitions in Oklahoma, Illinois, North Carolina, Michigan and Iowa. Capitolis, the Citi-backed fintech, said its $220 million Series E will fund its purchase of eSecLending. FDIC comments on its merger proposal close November 23. |
| ▸ | AI build-out credit: The Financial Times reported a leap in SpaceX credit default swaps after its report that the company is seeking $40 billion of debt to buy Nvidia chips. The Wall Street Journal reported that Broadcom is seeking financing for OpenAI's custom chip, with Apollo and Blackstone among the lenders approached. For banks, the exposure is on the lending side: protection on AI borrowers is repricing while banks place the $60 billion Broadcom-Anthropic package they began syndicating October 6, and private lenders are bidding for the same deals. The CFTC, separately, is taking comment on the listing of compute derivatives contracts. Comments close October 20, 12 days out. |
POLITICAL & LEGISLATIVE Pressure came at the Fed's rate path from the White House; it carried no formal action this week. | ▸ | Trump on the Fed, mortgage rates: President Trump said the Federal Reserve Board would like to see the country do badly, in remarks reported this week that targeted the Fed over mortgage rates. The Washington Examiner reported that the Fed won't disclose whether Trump has called Chair Kevin Warsh. No removal action accompanies the remarks. |
WHAT'S COMING | ▸ | CRA confirmation form, two OCC clocks: The OCC's renewal notice for its Community Reinvestment Act Qualifying Activity Confirmation Request Form, the voluntary form banks use to ask whether an activity earns CRA credit, publishes in the Federal Register today; the OCC estimates about 22 respondents a year, with comments due December 7. The comment window on the OCC's CRA regulations closes October 13, five days out, so banks that want a confirmation route preserved should say so in that docket. The form dates to the OCC's 2020 CRA rule. |
| ▸ | Regulation Crypto Assets comments: Comments on the SEC's Regulation Crypto Assets (Release 33-11434; 91 FR 54510) close October 20, 12 days out. |
WHAT IT MEANS | ▸ | The second increase the minutes describe lands after third-quarter marks are set. Third-quarter reports close the books at September 30, and the 10-year has since climbed past Monday's 5.31 percent close to 5.34 percent before today's open. Unrealized losses on fixed-rate securities reported for the quarter will therefore understate the position banks hold today, while the second increase most members expect would come before year-end marks. Asset-liability committees briefing boards on third-quarter results should present the October position next to the reported one. |
Dates That Matter OCT 8
today | Effective: Clearing Requirement Determination Under Section 2 of the Commodity Exchange Act [CFTC] | OCT 13
5d | Comments close: Community Reinvestment Act Regulations [OCC] | OCT 13
5d | Watch: respondents' briefs in opposition due in *Custodia*, S. Ct. No. 26-62 [Watch] | OCT 14
6d | Comments close: Expanded Examination Cycle for Certain Small Insured Depository Institutions and U.S. [OCC] | OCT 14
6d | Watch: comments due on TabaPay's BHC application for Transact Bank, N.A. [Watch] | OCT 15
7d | Comments close: Petition for Rulemaking of Robert Michael Vanleeuwen [FTC] | OCT 16
8d | Effective: Whistleblower Award Determination [CFTC] | OCT 20
12d | Comments close: Request for Comment on the Listing of Compute Derivatives Contracts [CFTC] |
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Today's inputs
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