The Overnight RateThree moves
Housing. Builders are cutting to sell. The Census Bureau put September new-home sales at an annual pace of 676,000, down 5.3% from a year earlier, and the median price at $400,400, 3.9% below last September (Census). There were 476,000 new homes for sale, or 8.4 months of supply at the current pace. Existing homes are holding up better on paper: the Case-Shiller national home price gauge rose 2.1% from a year earlier in August, though it trailed 3.4% inflation for a 15th straight month (Case-Shiller release). A caveat: the median carries an 8.9% margin of error. We’d say the builder with a lot full of finished homes is setting the price for the resale seller down the street.
AI and data centers. The Energy Department offered Constellation a conditional loan commitment of up to $5 billion to add nearly 1.1 gigawatts at eight existing nuclear plants in Illinois, Maryland and Pennsylvania (DOE). That’s extra output from reactors already running. Constellation says 20-year contracts with Google and Amazon already backed more than $7 billion of investment for about 1,080 megawatts, and that the federal loan could lower financing costs (Constellation). The catch is the word conditional, and Constellation says this isn’t a final decision to proceed at every plant. Our read: the tech buyers lock up the power, and public credit trims the interest bill on building it.
Energy prices. Brent crude rose $1.50 to $115.59 a barrel early Wednesday after Yemen’s Houthis said they struck Saudi Arabia’s Ras Tanura refinery, the kingdom’s largest (CNBC). Brent settled at $113.88 on Tuesday after topping $117 last week, its highest since April, Reuters reported (Reuters via Investing.com). At the pump, AAA’s diesel average rose 3 cents in a week to $6.35 while regular slipped 2 cents to $4.25 (AAA). Diesel is the tell. On the other hand, regular is 23 cents below a month ago. We think truckers and farm operators, who burn diesel, pay for refinery risk well before commuters notice it.
What could move prices
The Fed’s decision is due at 2:00 p.m. ET, with the press conference at 2:30 (Federal Reserve). Kalshi had an October hike at 5% at 3:43 a.m. ET, down 3 points from Tuesday’s issue, and a December hike at 73%, down 2 (Kalshi). The range sits at 3.75% to 4.00% after September’s hike. If the statement leans on fuel costs, December odds likely climb; language about softer demand would pull them back.
The calendar
The Bureau of Economic Analysis posts third-quarter GDP and September personal income and spending Thursday at 8:30 a.m. ET (BEA). Growth ran at a 2.2% annual rate in the second quarter, and the PCE price index was up 3.4% from a year earlier in August, by our math from BEA data on FRED. Growth under 1% would be news, and so would PCE inflation at 3.7% or higher.
Who pays: the merchant
Visa’s fiscal fourth-quarter net revenue rose 13% to $12.1 billion while payments volume grew 9% (Visa via SEC). Data processing revenue climbed 16% to $6.2 billion. On the call, finance chief Christopher Suh listed the cost of fuel among the factors behind 10% growth in US payments volume (Motley Fool transcript). Most card fees scale with the size of the sale, so a pricier tank hands the networks and card issuers a bigger cut with no extra swipes. Visa also booked a $469 million provision for the interchange case merchants brought over those fees. As we see it, the station owner pays more to serve the same driver.
Net net: when fuel costs more, the swipe fee grows with the ticket, and the merchant covers the gap.
Also moving
- Treasury demand: Indirect bidders were awarded about $41.6 billion of Tuesday’s $70 billion five-year sale at 4.845%, up from $37.8 billion in September, by our math from TreasuryDirect data (TreasuryDirect); dealers kept just $7.3 billion a day before the Fed.
- Consumer mood: The Conference Board’s confidence index rose 7.5 points to 91.7 in October, and its economist tied the rebound to gasoline easing from September (PR Newswire); people still planned less spending on services and durable goods.
- Rate cuts: Polymarket (International) puts no Fed cuts in 2026 at 96%; variable-rate borrowers are priced for no relief from the two meetings left.