HighIV Macro Policy & Sovereign Debt23 October 2026, Friday
US firms raise selling prices at fastest pace since 2022
S&P Global's flash PMI, released on 23 October, showed the output price index at 59.8, its highest since August 2022. The same day, the Michigan survey's one-year inflation expectation rose to 4.7%.
According to S&P Global's flash data, as reported by Finimize, the US composite PMI slipped to 57.6 in October but stayed in expansion territory. The output price index rose to 59.8, the highest since August 2022. The suppliers' delivery times index fell to 38.1, the lowest in more than four years, a sign that supply bottlenecks are worsening. Academic Capital reports that oil, energy prices and material shortages amplified cost pressure.
In the University of Michigan survey conducted from 22 September to 19 October, consumer sentiment fell to 48 from 48.1 in September. One-year inflation expectations rose from 4.6% to 4.7%, and the 5–10 year measure climbed to 3.5%; both are the highest since May. Buying conditions for durable goods hit a record low. About 70% of respondents expect interest rates to rise next year, the highest share in more than three years. Survey director Joanne Hsu said inflation was by far the bigger risk to the economy.
The Fed's policy range stands at 3.75–4.00%. Finimize says economists expect rates to be held at the 27–28 October meeting, with a possible hike in December. BNN Bloomberg reports that September PCE inflation, due next week, is expected at 3.7% year on year. Brent closed up 3.1% at 116.72 dollars on 23 October, and the 10-year yield rose from 4.96% to 4.99%.
Talay assessment
Bottom line
In the US the energy shock is passing into prices without breaking demand. Demand is firm, companies can pass costs on to customers, and households are writing it into their expectations. Five-to-ten-year expectations rising to 3.5% is the picture the Fed fears most. This data set strengthens the case for a hold on 28 October paired with guidance towards a December hike.
Likely effects
- FedNegativeWeeks
The output price index at 59.8 and 5–10 year expectations at 3.5% firm up the data case for a December hike.
- Yield curveNegative1–6 months
Rising inflation expectations keep extended-maturity yields in the 5% band; the safe-haven dip of 22 October was partly reversed on 23 October.
- HouseholdsNegative1–6 months
Record-low buying conditions for durables suggest big-ticket spending will be deferred while rates and prices rise together.
Possibilities, ranked
- 1Fed holds and signals December60%
Rates are held on 28 October, the statement stresses price pressure and pricing for a December hike firms up.
Watch: The 28 October FOMC statement and September PCE at 3.7% or above
- 2Slowing demand curbs prices25%
The tech sell-off and falling confidence cool demand, the November PMI price index eases and a December hike is put off.
Watch: The November flash PMI output price index falling below 57
- 3Fed springs an October hike15%
Citing drifting expectations, the Fed hikes without waiting and the 10-year yield breaks above 5.15%.
Watch: The 28 October decision
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- PMI output prices▲ 59.8
- 1-year inflation expectation▲ 4.7%
- US 10-year▲ 4.99%
- Brent▲ $116.72
Historical context
US 10-year yield, last 6 months
- 117/09 · Fed dot plot median for 2026 rises to 4.00-4.25% while the 10-year yield eases from 5.04% to 4.94%
- 221/09 · The Fed's Goolsbee: if inflation is coming from demand, the rate response will be sharper and front-loaded
- 323/09 · US Treasury sells $70 billion of 5-year notes at 5.033%; after hot PMIs the 10-year yield hits 5.10%, its highest since 2007
- 424/09 · India's Sensex falls 1,247.71 points to 73,580; rupee presses against the 96 threshold as Brent tops $102 and the US 10-year yield exceeds 5.11%
- 524/09 · US Treasury sells 44 billion dollars of 7-year notes at 5.085%: highest yield since April 1993 as indirect demand falls to 57.2%
- 624/09 · No joint statement at Xi–Trump summit: tariff truce extended by just 2 months from 10 November to 10 January, no new decisions on chips or rare earths
- 725/09 · Michigan consumer sentiment at a 4-month low of 48.1, 1-year inflation expectations jump to 4.6%; US 30-year yield rises to 5.50%
- 827/09 · Bessent urges Fed flexibility on rates, citing AI productivity
- 928/09 · US ten-year Treasury yield climbs to a 19-year high
- 1029/09 · US long-dated yield holds above 5.5% despite Treasury buybacks
- 1130/09 · Softer US inflation erodes the odds of an October rate rise
- 1201/10 · US Treasuries pull back from their peak as two-year yield drops 10 basis points
- 1302/10 · Logan seeks 50 more basis points while most of the Fed waits
- 1405/10 · Nasdaq hits record as Treasury yields touch 24-year high
- 1506/10 · Fed's Schmid and Daly keep the door open to hikes despite high yields
- 1607/10 · Fed minutes point to one more rate rise before year-end
- 1707/10 · US ten-year auction clears at the highest yield in a quarter-century
- 1814/10 · US inflation climbs to 3.7%, putting an October hike back in play
- 1915/10 · US producer inflation jumps to 6.3%, yet Treasury yields fall
- 2016/10 · Warsh gives no rate signal in Bangkok and October hike odds fall
- 2119/10 · Barclays now expects Fed hikes in both December and January
- 2220/10 · US pending home sales sink to their lowest since 2001
- 2320/10 · Thirty-year Treasury yield slips below the 20-year point
- 2422/10 · US 10-year yield slips below 5% as tech sell-off deepens
- 2523/10 · US firms raise selling prices at fastest pace since 2022
- 2624/10 · Fed expected to hold on Wednesday as markets price a December hike
- 2727/10 · Domestic buyers displaced foreigners at the US two-year auction