Universal macro data across most economies, with inflation continuing to tick up and remaining the main worry, while growth generally surprised to the upside. The market is clearly placing more weight on the inflation prints at the moment, while AI expenditure, as rates remain high, is adding to nervousness. 

As expected, the Fed kept rates unchanged at 3.75–4.00%, but two policymakers dissented in favour of a further 25bp hike. Warsh stressed that policymakers were not on a predetermined path and offered no clear signal for December. He also announced that, from 2027, the Fed will reduce the number of meetings at which members vote on rates. The data gave hawks plenty to work with: an energy-driven jump in consumer and producer prices, and a Q3 GDP print well above expectations.

September headline CPI rose 0.6% month-on-month, its largest gain in five months and in line with forecasts, after August's 0.4%. That lifted the annual rate to 3.7% from 3.4%, above the 3.6% expected. Gasoline, up 9.1% on the month, accounted for more than half the increase and rose 34% year-on-year. This time, core inflation offered less comfort: core CPI rose 0.3% for a second month, defying forecasts of 0.2%. The annual core rate climbed to 2.6% from a five-year low of 2.4%, with shelter up 3.2% and airline fares up 22.4%. PPI jumped to 6.3% year-on-year, the highest since December 2022 and well above the expected 5.3%. The Fed's preferred gauge, core PCE, rose 0.3%, in line, lifting the annual core rate to 3.1%, its highest since May. 

Growth was strong, with Q3 GDP expanding at 3.4%, the most in a year, up from 2.2% in Q2 and above the 3.2% expected. Private domestic investment surged 19.4%, driven by AI-related spending, with equipment up 20.9%. Consumption held at 3.8%, while government spending jumped 5.3%, driven by crude sales from the Strategic Petroleum Reserve. 

The labour market was the soft spot. As flagged last month, September payrolls rose just 29k against roughly 90k expected, with July and August revised down by a combined 60k. Unemployment rose to 4.2% from 4.1%, though largely because a 485k jump in the labour force lifted participation to 62%. Average hourly earnings growth slowed to 3.0% year-on-year, the least since May 2021. 

UK inflation accelerated further, with September CPI rising to 3.5% from 3.1%, the highest since October 2025 and above the 3.4% expected. Transport made the largest upward contribution, with motor-fuel inflation at 29.8% from 23%. Petrol rose to its highest since August 2022, and diesel to its highest since July 2022. Services inflation, the BoE's key metric, rose to 3.7% from 3.4% after two months at that level and goods inflation rose to 3.2% from 2.7%. Core CPI climbed to 2.8% from 2.6%, after four straight months at that level.

UK growth held up, with August monthly GDP rising 0.1%, down from 0.4% in June and July but beating expectations of a 0.1% contraction. 

Annual growth rose to 2.1%, the strongest since October 2022. The October flash PMIs then pointed to a re-acceleration. The composite rose to an eight-month high of 53.1 from 52.0, above the 51.8 expected, with services up to 53.1 from 52.1 and manufacturing rising to 52.8 from 51.9, its fastest output growth in just over two years. 

The BoE did not meet in October; it will next decide on 5 November, with consensus pricing in a 25bp hike to 4%. 

China's September data were firmer across the board. Q3 GDP grew 4.5% year-on-year, up from Q2's three-year low of 4.3% and above the 4.4% expected. That leaves growth over the first nine months at 4.6%, at the lower end of the 4.5–5.0% target. Retail sales rose 1.1% year-on-year, from 0.4% and above the 0.5% expected, the strongest since March, and 0.4% on the month. 

Fixed-asset investment was unchanged at -7.2% year-to-date. Within that, property investment fell to -20.6% from -19.9%, infrastructure to -4.2%, and manufacturing to -2.1%. Industry again led: output accelerated to 5.5% from 5.2%, the strongest since March, with computers and communications equipment up 16.4%. New-home prices fell 2.8% year-on-year, the 39th straight monthly decline but the slowest since December 2025. Shanghai (+2.8%) was again the only major city still rising, while Beijing's decline deepened to -2.7%.

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