After the Federal Reserve raised its benchmark rate to 3.75%–4% on September 16, investors are turning to a busy week of data for clues about the next policy move. Bank of Japan meeting minutes, US inflation, growth, employment and manufacturing figures could influence expectations for the Fed’s October 28 meeting—and move Treasury yields, the dollar, US stocks and bitcoin.
At the Fed’s last press conference, Chair Kevin Warsh did not commit to another rate increase. He said policymakers should focus on trends rather than react to any single data point. Even so, interest-rate futures currently imply that traders see about a 64% chance of another increase in October.
Higher rates can improve returns on savings and bonds, changing investors’ appetite for riskier assets. Bitcoin was trading near $84,728. This week’s releases will help markets assess whether the case for further tightening is strengthening.
Bank of Japan minutes put rate differentials in focus
The Bank of Japan will release minutes on Monday from its July 30–31 policy meeting. The record captures discussions between two rate increases: the BOJ lifted its policy rate to about 1% in June, then raised it again to roughly 1.25% on September 18.
In its September statement, the central bank said it would continue raising rates. Japanese rates remain more than 2.5 percentage points below US rates. If the minutes point to a faster pace of tightening, the gap could narrow, with implications for global bond markets. Japanese government bonds, the yen, US Treasury yields and bitcoin will be among the assets in focus.
Core PCE remains above the Fed’s target
The personal consumption expenditures (PCE) price index is a key inflation measure for the Fed and also tracks consumer spending. Core PCE excludes volatile food and energy prices.
The US Bureau of Economic Analysis reported that core PCE rose 3.3% in the 12 months through July. Markets expect a 3.4% year-over-year increase for August, well above the Fed’s 2% inflation target. Consumer spending is forecast to rise 0.5% month over month, which would be its largest monthly gain in more than a year.
Strong inflation and spending figures together could prompt markets to reassess how long rates may remain elevated. Weaker readings could shift expectations in the other direction. Treasury yields, the dollar, the S&P 500, the Nasdaq and bitcoin could all respond.
Final second-quarter GDP estimate will test growth outlook
The Bureau of Economic Analysis is due to publish its third and final estimate of second-quarter GDP on Wednesday. GDP measures the value of economic output. The second estimate put annualized growth at 1.5%, down from 2.1% in the first quarter.
The final reading will help investors gauge whether economic momentum has slowed further. Considered alongside inflation, it will also inform views on Fed policy and the environment for corporate earnings. For stocks and crypto assets, the combination of growth trends and rate expectations may matter more than any one figure in isolation.
September jobs forecast points to slower hiring
The September employment report is another key release this week. Forecasters expect 90,000 new jobs, down from 162,000 in August. Slower hiring could alter perceptions of economic resilience and the policy outlook, though the market reaction will depend on whether the report aligns with other indicators.
The Fed has said it will not set policy based on a single number. Traders will therefore weigh employment alongside consumer spending and inflation rather than treating the jobs estimate alone as a verdict on whether rates will rise or hold.
Manufacturing data adds a read on demand
Manufacturing figures will offer another indication of business activity and demand. Investors will compare them with GDP, spending and employment data to assess whether the economy is cooling. With all five indicators arriving in succession, rate expectations may adjust as each reading comes in. Treasuries, the dollar, US stocks and bitcoin remain in focus.