MediumIV Macro Policy & Sovereign Debt2 October 2026, Friday · 02:27 TRT (UTC+3)
Logan seeks 50 more basis points while most of the Fed waits
Dallas Fed President Logan said on the evening of 1 October that the policy rate needs to rise by at least another 50 basis points. After jobs data showing a gain of 29,000 the next day, Cleveland Fed President Hammack said there was time to decide. Markets price only a 16–18% chance of a hike on 27–28 October.
Logan spoke to business leaders in Dallas on 1 October, according to a Reuters report cited by Investing.com. She argued that the policy rate, now at 3.75–4.00, should rise by 50 basis points or more. In her view, inflation will not fall much below 2.5% without higher rates. Logan noted that the 10-year yield had climbed as high as 5.24%. She said the term premium pushing yields above 5% — the extra return investors demand for holding longer-dated bonds — could slow the economy and reduce the need for tightening.
According to a Yahoo Finance round-up from 1–2 October, New York Fed President Williams said on 29 September there was no rush and hinted at one more hike towards the end of the year. Vice Chair Jefferson asked for more data on 1 October. Minneapolis Fed President Kashkari projected 1 hike this year and 1 next year, but said he had no strong view on October. The August PCE price index was up 3.4% on the year.
In an interview with PBS on 2 October, Hammack said September's job gain of 29,000 and the 4.2% unemployment rate were in line with the recent trend. According to Reuters, job growth has averaged 41,000 a month over 12 months. Yahoo Finance wrote that the probability of an October hike fell from 70% on Monday to 18%; Quartz, citing CME FedWatch, put the probability of a hold at 84%. Sources conflict on the 10-year yield at the 2 October close: Quartz reported 5.18% (−6 basis points), Yahoo Finance 5.28% (+4 basis points).
Talay assessment
Bottom line
The split at the Fed is about timing, not direction. Logan and Kashkari see at least one more hike, while Williams, Jefferson and Hammack leave October to the data. Logan's point on the term premium matters: 10-year yields above 5% are doing part of the Fed's work. The most likely path is a hold in October and a 25 basis point hike in December.
Likely effects
- US yield curveUncertainWeeks
With October odds down to 16–18%, the front end eases while the back end stays above 5% on inflation and the term premium, so the curve tends to steepen.
- Emerging-market borrowingNegative1–6 months
A Fed path of 25–50 basis points of further hikes keeps dollar funding costs high, sustaining risk premium pressure on countries rolling over external debt.
- Türkiye's external financingNegative1–6 months
As a December hike is priced in, Türkiye's eurobond and syndicated loan costs stay high, and the CBRT manages reserves within narrower room.
Possibilities, ranked
- 1Hold in October, hike in December60%
The rate stays at 3.75–4.00 on 27–28 October, and the statement leaves the door open for December.
Watch: October CPI data and FedWatch odds of a December hike rising above 50%
- 225 basis points in October20%
Inflation data surprise to the upside and Logan's line wins over the majority.
Watch: Core inflation exceeding 0.4% month on month in September CPI
- 3Hiking cycle pauses20%
Labour market weakness persists and higher 10-year yields stand in for tightening; the Fed waits until year-end.
Watch: A second consecutive monthly job gain below 50,000 in October
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- 10-year yield (2 Oct, conflicting)▼ 5.18–5.28%
- October hike probability▲ 16–18%
- Further hikes Logan wants▼ ≥50 bp
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
Sources
- Investing.com (Reuters) — Fed's Logan calls for '50 bps or more' in rate hikes
- Investing.com (Reuters) — Fed's Hammack tells PBS there's still time to weigh next monetary policy move
- Yahoo Finance — Fed policymakers lean against October rate hike
- Yahoo Finance — Weak September jobs report likely to keep Fed on hold for October
- FXStreet — Fed's Logan: Policy rate must increase by additional 50 bps or more