To The Moon

Stocks Fall, Rate-Hike Fears Return. On Wed, 23 Sep 2026 - US market fell big time across the board. By the time 4pm arrived, (see below) DJIA : -0.68% (-352.10 to 51,511.59. S&P 500 : -0.75% (-58.61 to 7,706.03). Nasdaq: -1.13% (-308.241 to 26,936.037) Strong Economic Growth Brings Fresh Inflation Risks. Rising inflation and a strengthening US economy are pushing the US Federal Reserve toward yet another interest hike. This timing comes right before the crucial US mid-term election. On Wednesday, market traders heavily bet that a 2nd consecutive rate hike will take place in late October 2026 when the Fed convenes. On Wednesday, the closely watched preliminary S&P Global's flash US Composite PMI Output Index report for September 2026, jumped to its highest level since July 2021. The survey's measure of prices paid by businesses for inputs surged to a nearly 4-year high. (see below) Headline flash S&P Global US PMI Composite Output Index rose from 56.0 (August) to 58.4, registering the fastest expansion since July 2021 and an acceleration of growth for a 4th successive month. (see above) Services continued to lead growth with a 5-year high, while manufacturing output also accelerated this month, to its fastest pace since April 2022. (see above) New order inflows also gathered pace in both sectors, with growth reaching the highest: In the service sector since March 2022. In the manufacturing sector since April 2022. In both cases, demand was buoyed principally by the domestic market, as goods export volumes continued to fall and services exports rose only modestly. Higher Energy Costs Add to Price Pressures What else ? on Wednesday, oil prices rose by about +2.0%, with Brent crude reaching $101.09 a barrel, while diesel fuel averaged over $6.50 a gallon, for a while. (see below) As of 25 Sep 2026 - Asia time, Brent is still above $100 The increase is driven by ongoing US-Iran war, that continues to disrupt oil supplies with no peaceful ending in sight. High diesel prices are especially concerning because diesel powers the trucks and machinery needed to manufacture and transport goods everywhere, which can push prices up across entire US economy. The background of rising inflation risks and a strong US economy mean the Fed will likely raise interest rates further. On Wednesday, Fed Governor Michael Barr shared in what has become an unusual piece of forward guidance from a US central banker. In his speech at a housing affordability conference hosted by Federal Reserve Bank of Chicago, he mentioned that: Risks to the Fed achieving its inflation target (2%) have increased. While risks to US labour market have receded. As such, further policy adjustments are likely required to ensure inflation comes down to target in a timely fashion. With changes to the economy, policymakers were out of position. Hence an adjustment in the right direction was necessary, referring to September 2026’s interest hike. In a unanimous decision on 16 Sep 2026: US central bank’s policymakers raised the Fed funds’ rate to the 3.75% - 4.00% range. 16 of 18 of Fed officials ⁠hinted that there could be at least one more rate hike before end 2026. Chairman Kevin Warsh said the Fed was removing "a dose of accommodation" but declined to say if he felt more would be needed. Bond Markets Reprice Fed’s Policy Path. Following the release of S&P Global's preliminary flash US Composite PMI Output Index report on Wednesday, US Treasury yields jumped. This pushed the benchmark 10-year yield back above 5% to its highest level since 2007. (see above) The S&P Global surveys showed economic activity accelerating much faster than expected alongside intensifying input-cost inflation, This caused traders to raise their expectations for further Federal Reserve rate hikes and driving bond yields higher. Even the weak demand for 5-year US Treasury notes at Wednesday's auction pushed those yields to a 19-year high. Reflecting the immediate shift in the bond market, short-term US interest-rate futures contracts were pricing about a 70% chance of another rate hike at the October 27-28 FOMC meeting, up from about 55% earlier in the day. This is consistent with CME Fedwatch tool’s forecast for upcoming FOMC meeting in October 27-28. (see above) In Focus - Political & Affordability Risks. As financial markets adjust to these shifting monetary expectations, the political stakes surrounding the upcoming calendar are coming into sharp focus. Days after FOMC’s end October 2026 meeting and the interest hike decision, Trump's Republicans will be defending slim majorities in both houses of Congress in national elections set for 03 Nov 2026. Hiking interest rates back-to-back (in September & then October) will highlight the high cost of living, that voters are most concerned about and that would undercut Trump’s popularity. Analysts say the inflation the Fed is trying to address, is mostly caused by the Trump government's policies decisions, including high taxes / tariffs on imports and the Iran war. Affordability concerns for would-be homeowners are also in focus. The US Mortgage Bankers Association reported on Wednesday (also) that the average rate on a US 30-year fixed-rate mortgage rose to a more than 2-year high of 7.12% last week. Trump has laid into the Fed, though ‌not new Fed chair Warsh personally, for what he called a "political" decision to raise interest rates instead of trimming it. Of late, he has finally decided to address inflation concerns with proposals that includes (a) ending the war in Iran after the elections and (b) banning exports of US diesel, in a bid to artificially keep diesel price under control In an interview released also on Wednesday, Chicago Fed President Austan Goolsbee talked about current energy shocks and warned that higher energy prices might not go away on their own. Instead, they could cause long-lasting inflation. Because of this, he suggests that US central bank will likely need to raise interest rates more. He also warned that policymakers need to be careful about underestimating inflation. When major supply disruptions happen eg. Covid pandemic, trade tariffs or oil spikes, many will assume prices will stabilize on their own quickly. However, because those shocks actually tend to drive long-lasting, sticky inflation, he is warning that the central bank must take them seriously and be careful not to ignore them, or inflation will stay high. When Economic Strength is a Burden To sum it up, I think US market is entering a difficult phase where strong growth no longer guarantees rising share prices. If inflation stays stubbornly sticky, investors may have to accept that higher borrowing costs, not weak demand, could become the main threat to future gains. Perhaps the biggest risk is that economic strength begins to feel like a burden for households, businesses and policymakers alike. What do you think ? Remember to check out my other posts. (See below). Help to Repost ok, Thanks. Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks. NVDA Weak valuation - Opportunity or Trap? US Market Crash: Warning or False Alarm ? TTE: The Oil Stock Built for Disorder ! 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