The Overnight RateThree moves
Fed and rates. New York Fed President John Williams told Bloomberg that “it may be appropriate to have one more rate hike,” and on 2027, “I don’t think at this time I have any reason to believe that we would need to do more” (CNBC). Kalshi has an October hike at 19%, up from 17%, and December steady at 75% (Kalshi). He’s a permanent voter, and a cap at one more matters to anyone with a variable-rate card or home equity line, which reprice with each quarter point. The counterpoint: CNBC says futures traders see about 90% odds the Fed ends 2027 at least half a point higher. I’d give Williams the direction and the traders the benefit of the doubt until CPI prints.
Credit. JPMorgan’s Card Services net charge-off rate was 2.91% in the third quarter, and Citi’s US card net credit losses fell 4% from a year earlier to $1.67 billion (JPMorgan, Citi). Wells Fargo’s consumer charge-off rate slipped to 0.70% annualized (Wells Fargo). A charge-off is a balance the bank stops trying to collect, so flat-to-lower rates mean most borrowers are keeping up. The counterpoint sits in the reserves: Citi set aside an extra $208 million for card losses, citing the economic outlook. My read: banks see the bills getting paid now and are budgeting for that to change.
AI and data centers. Fed Governor Christopher Waller said Tuesday in New Delhi that AI-driven demand pressure “could last anywhere from two to three years,” since hyperscalers are “still planning on spending trillions of dollars over the next three years” (Bloomberg forum, via Scotsman Guide; Fed calendar). The productivity payoff is “still a few years out.” He said high long-term government yields are doing “some of the work” of hikes on homes and cars, and counted heavy AI bond issuance among the reasons they’re up. That’s the household channel: AI bonds compete for the same investors who fund home and car loans. The counterpoint: he called inflation expectations “well anchored.” My read: AI capex is now a borrowing-cost story too.
What could move prices
The Energy Department issued an emergency order Monday letting PJM, the mid-Atlantic grid operator, run specified plants and call on backup generation before its top emergency level, EEA 3 (DOE). DOE cited high demand, autumn plant maintenance and transmission outages; the order runs through Oct. 16 (DOE order page). Emergency dispatch usually means running costlier units, which feed wholesale power and later utility bills. My read: a PJM emergency alert or an extension past Thursday is the trigger.
The calendar
BLS publishes September CPI at 8:30 ET today (BLS). Prices rose 3.4% in the year through August. The Cleveland Fed’s model has September up 0.53% on the month and 3.60% on the year (Cleveland Fed). I’d treat 3.8% or higher as news that makes one more hike look light, and 3.4% or lower as news that Williams can lean on.
Who pays: the cardholder who carries a balance
Citi’s US card unit booked negative $758 million of noninterest revenue in the third quarter, down 62% from a year earlier, as partner payments and rewards costs outran swipe and annual fees (Citi). Net interest income, the interest charged on balances, rose 6% to $5.42 billion. The mechanism, once: fees no longer cover the points and the co-brand partner’s cut, so interest carries the program. My read on the payer: the cardholder who revolves a balance. Payee: the cardholder who pays in full and banks the miles, plus partners like American Airlines. The counterpoint: merchants pay swipe fees too.
Net net: at Citi, the rewards cost more than card fees bring in, and interest on balances covers the gap.
Also moving
- Housing: NAR says existing-home sales rose 1.5% in September to a 3.99 million annual pace, 2.2% below a year earlier (NAR); Lawrence Yun says buyers have “improved negotiating power.”
- Stocks and earnings: UnitedHealth’s medical care ratio fell to 88.4% from 89.9% and it raised its 2026 outlook (UnitedHealth); more of each premium dollar stayed with the insurer.
- Corporate money: JPMorgan “reduced share repurchases this quarter,” Jamie Dimon said, to a net $664 million in the release (JPMorgan); I’d read that as capital kept for lending.