Economists expect September inflation hike in last reading before Fed meets

September’s inflation report, due at 8:30 a.m. Eastern on Wednesday, is the last price reading the US Federal Reserve will see before it meets on October 27 to 28.

In August, prices rose 0.4% from the prior month and 3.4% from a year earlier, the Bureau of Labor Statistics said on September 11. Prices excluding food and energy, the core index, rose 0.3% on the month and 2.4% on the year.

CNBC reported Tuesday that economists expect the September index to rise 0.6% on the month and 3.6% on the year, and the core index to rise 0.2% on the month and 2.5% on the year. Morningstar, citing FactSet on Monday, had the monthly increase at 0.5% and the same 3.6% over the year. FactSet’s core figure was 0.2% on the month and 2.4% on the year, unchanged from August.

Before the open, the State Street SPDR S&P 500 ETF, ETF:SPY, was 0.1% above Tuesday’s close. The Invesco QQQ Trust, Series 1, ETF:QQQ, was 0.2% below it.

What the Fed said it would weigh

The Fed raised its target range by a quarter of a percentage point on September 16, to 3.75% to 4%, in a unanimous vote. Minutes of that meeting, released on October 7, said most participants assessed that another increase would likely be appropriate by year-end, and that later decisions would depend on the incoming data.

CME FedWatch on Tuesday put an 80.5% probability on no change at the October meeting.

Oil expected to propel October prices

By 7:05 a.m. Eastern, West Texas Intermediate crude was at $95.61 a barrel, up 1.6% from Tuesday’s close. That price feeds October’s price reading, due on November 10. Brent crude was at $106.54, up 0.8%.

CNBC tied the rise to tensions between Saudi Arabia and the Houthis, the Iran-allied armed group that holds Sanaa, Yemen’s capital, and to an International Energy Agency warning. The agency’s October report, CNBC said, warned that constraints on diesel markets could last well into 2027, with fresh attacks threatening a recovery in supply.

Al Jazeera reported that Saudi Arabia said it had intercepted missiles aimed at Riyadh and at Dhahran, where Saudi Aramco is based, and that the Houthis were threatening further strikes on Saudi airports and oil sites.

ASML’s record quarter

ASML, the Dutch company whose machines print the circuit patterns on chips, reported third-quarter sales of €11.7 billion, which it called a record, and net income of €5.0 billion. The gross margin was 57.5%. In July, it had set the quarter at €11.0 billion – €12.0 billion of sales and a gross margin of 55% to 57%. The company said sales came in toward the high end of that range and that the margin came in above it. It forecast fourth-quarter sales of €14.2 billion to €15.2 billion and a gross margin around 57%.

Reuters reported that the forecast was above analysts’ expectations. Analysts polled by the London Stock Exchange Group had expected sales of €14.19 billion and a gross margin of 55.4%. For 2026, the current year, ASML now expects sales of €44 billion to €45 billion and a gross margin around 56%, against a July sales range of €43 billion to €45 billion.

“Our customers continue to increase their short- and medium-term equipment demand forecasts with us, driven primarily by their views on the size and duration of AI-related investments,” ASML's president and chief executive Christophe Fouquet said in the results statement.

In July, the company planned a 30% increase for 2027 across two lines: its current extreme-ultraviolet machines and an older immersion system. It said it was studying another 30% for 2028. Fouquet said that, according to current estimations, supply will not fully meet customer demand in 2027 or 2028. The investor call is at 9:00 a.m. Eastern.

In Amsterdam, the shares were about 2% higher, RTT News reported. ASML’s Nasdaq-listed shares were 0.6% below Tuesday’s close before the US market open.

Bank of America fined as BlackRock climbs

On Tuesday, the Treasury Department announced enforcement actions imposing more than $1.21 billion in penalties on Bank of America for anti-money-laundering and sanctions violations. The Treasury said the total was the third-largest penalty in the department’s history. Bank of America admitted it willfully violated the Bank Secrecy Act and failed to report more than $5 billion in suspicious activity on time, the department said.

“Even the biggest financial institutions are not above the law,” Treasury Secretary Scott Bessent said in a statement.

Bank of America said the penalties will mean a non-tax-deductible charge of $1.2 billion in its third-quarter results, cutting net income by about 17 cents a share. The shares fell 1.1% on Tuesday, after the penalty was announced.

BlackRock said net inflows were $205 billion in the quarter, with $175 billion of that going into long-term funds. The firm's assets under management were $15.5 trillion. The shares were 4.3% higher before the open.

Yields fall ahead of CPI reading

CNBC put the 10-year Treasury yield at 5.195% in a pre-dawn report, down 2 basis points. The iShares 20+ Year Treasury Bond ETF, ETF:TLT, was 0.1% higher before the open.

Legal & General, Britain’s largest asset manager, is hedging government-bond purchases against another selloff, Bloomberg reported Wednesday. Chris Jeffery, its head of macro strategy, told Bloomberg the firm was using bond futures to hedge interest-rate exposure. He cited borrowing tied to artificial intelligence by the largest cloud companies, heavy government debt loads, and the prospect of further rate increases.