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Thursday, October 15, 2026 |
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The Last Page.
The last page, first.
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Will the Fed Raise Rates Six Days Before the Midterms?
September prices came in hotter than Wall Street expected. In one day, the odds of an October 28 rate hike went from one in five to a coin flip. The Fed chairman speaks tonight, and we ran both outcomes forward to your mortgage and savings.
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Today’s story is about the Fed’s October 28 decision. The paid message below is from a trader who wants his readers in position before it.
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The Federal Reserve just warned another rate hike could hit soon.
And one ticker could give you the chance to add big money to your account.
But you need to be positioned before October 28.
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The story
Prices rose 0.6% in September alone, the Labor Department said Wednesday, and 3.7% over the past year. Gasoline did most of the damage, up 9.1% in a month.
The number the Fed watches closest came in hot too. Core prices, which leave out food and fuel, rose 0.3% against the 0.2% Wall Street expected. Used cars, airfares, clothing and medical care all climbed.
Traders changed their bets on the Fed by lunch. Futures tied to the Fed’s rate put the odds of a hike on October 28 at about 54%, per CME’s FedWatch tool. A day earlier they were 21%.
Your borrowing costs were already high before this report. The average 30-year mortgage was already 7.4% last week, Freddie Mac says, a month after the Fed’s first rate hike since 2023.
The two camps were on the record within hours. Robin Brooks of the Brookings Institution warned the dollar could lose value, which he called “debasement,” if the Fed sits still. Oxford Economics now expects a hike this month. Charlie Ripley of Allianz pointed to housing costs, a big part of the core rise. “We don’t think the increase in shelter costs is the beginning of a broader trend,” he said.
Kevin Warsh, the Fed chairman, has said he is “not in the forward guidance business.” He speaks once more before the meeting, tonight in Bangkok.
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Blackout
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The quiet stretch before each Fed meeting, when officials stop speaking in public.
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3.7%
How much prices rose over the past year, per September’s report
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54%
Odds of an October 28 rate hike in futures markets, per CME FedWatch
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7.4%
The average 30-year mortgage rate last week, per Freddie Mac
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Technology was the worst sector in the S&P 500 on Wednesday. Higher rates tend to weigh most on companies valued for profits years away. The paid message below is from Brownstone Research’s Jeff Brown, about one AI stock.
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Its “golden tablet” can produce intelligence up to 1,000 times FASTER than regular AI.
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If Warsh blames gasoline
Run forward to February 2027
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If prices keep spreading
Run forward to April 2027
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Best case
FEBRUARY 2027. Warsh told Bangkok what the numbers already showed: gasoline did most of September’s damage. The Fed held on October 28, and the election came and went without a rate fight.
Then the pump did the Fed’s work for it. Gas gave back much of its September jump over the winter, and the monthly price reports cooled.
Mortgage rates drifted back under 7%. On a new $400,000 loan, 6.9% instead of 7.4% is about $136 less a month, or roughly $1,600 a year.
Small-company stocks, hit hard by the September scare, led the market back. Your savings account still paid more than it did a year ago. No one rang a bell for any of it.
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Worst case
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APRIL 2027. The Fed raised rates on October 28, again in December and once more in March. Each statement said prices were rising too broadly, and each time it was right.
The increases spread past the gas pump into clothes and cars. Jeffrey Roach of LPL Financial had warned on Wednesday that they already were.
The average mortgage crossed 8%. On a new $400,000 loan that is about $165 a month more than today’s 7.4%, close to $2,000 a year.
Your bond fund lost value as rates climbed, and the companies that borrow most fell furthest. Houses on your street sat on the market longer, because fewer buyers could carry the payment. The Fed won its fight with prices, and it took six months of higher borrowing costs to do it.
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Both endings start with the Fed’s vote on October 28. The paid message below is about how much of your IRA sits in dollars the Fed controls.
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How it ends
You get one more rate hike on October 28 and a long pause after it, unless Warsh tells Bangkok tonight that September was mostly gasoline.
We ran it both ways. The Fed already hiked once, in September, and the officials who wanted to move sooner now have the numbers on their side.
Gasoline explains most of the headline jump, and the Fed cannot lower the price of oil. Core prices are another matter. Used cars, clothing and medical care do not move with the price of oil.
In September, Warsh said inflation is “too high and has been for too long.” A chairman on that record has little room to wait, even six days before an election. So the likeliest path is one more quarter point, then a pause long enough to see whether winter cools things.
Cable news is arguing hike or no hike. The question that reaches your statement is how long rates stay here. One quarter point barely moves a mortgage, while a year at these levels moves everything priced off them.
For you, today’s mortgage and card rates are the ones to plan around. The better yield on your savings will probably stick around too.
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Kevin Warsh’s fireside chat with the IMF’s Kristalina Georgieva, at 11:30 tonight Eastern, livestreamed from Bangkok. It is the Fed’s last scheduled word before the October 27 to 28 meeting. If he pins September on gasoline, the hike is off.
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