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[Quick Facts]

1. Biden requests $100 billion in aid for Israel and Ukraine.

2. WSJ's Timiraos expects the Fed to pause rate hikes in November.

3. Fed's Bostic says lowering inflation remains the main mission.

4. Fed Chair Powell hints at November pause in rate hikes.

5. The U.S. seeks to buy 6 million barrels of oil for reserve at a higher price than before.

[News Details]

Biden requests $100 billion in aid for Israel and Ukraine

U.S. President Joe Biden launched a new mission on Thursday to convince Americans they should spend billions more on supporting Israel and Ukraine in their wars. He said in an Oval Office address that U.S. support is critical for the two key allies who are locked in conflict. A U.S. official said Biden's request for emergency appropriations included a total of about $100 billion that would be spent on Israel and Ukraine over the next year, as well as securing the U.S.-Mexico border. Any appropriations measure would have to pass both the House and Senate. However, Republican lawmakers oppose spending on Ukraine, and the Republican-led House has been without a speaker for 17 days.

WSJ's Timiraos expects the Fed to pause rate hikes in November

Powell's speech suggests that rising long-term U.S. bond yields could cause the central bank to pause its historic rate hikes as long as recent efforts to lower inflation continue to make progress, wrote Nick Timiraos, a correspondent for The Wall Street Journal, yesterday.

That's because the rapid rise in long-term interest rates over the past month could slow economic growth and the continued rise in borrowing costs could be deemed as another Fed rate hike.

Timiraos also noted in the article that strong economic activity makes it difficult for the Fed to announce an end to rate hikes, and Powell did not do so on Thursday, but his comments pointed to a recent decline in inflation and a marked cooling of the labor market. This suggests a comfortable policy stance from the Fed, raising the bar for another rate hike in December or beyond.

Fed's Bostic says lowering inflation remains the main mission

Getting inflation back to the central bank's 2% target is a top priority, Atlanta Fed President Raphael Bostic said in a speech on Thursday. If policymakers see signs of further economic growth, it is possible to raise interest rates again. Considering uncertainties and risk factors, as well as the progress we have made, the Fed is proceeding cautiously.

Bostic had expressed support for a pause in rate hikes, but he did not comment on the current economy or the current policy outlook this time. His attitude has clearly changed to a hawkish one in the speech.

Officials are now leaning toward keeping policy unchanged next month after the recent rise in bond yields led to a tighter financial environment.

Fed Chair Powell hints at November pause in rate hikes

Federal Reserve Chairman Jerome Powell delivered a speech on October 19 (local time), saying that the strong performance of the U.S. economy and continued tightness in the labor market may require further tightening of borrowing conditions to keep inflation in check. But the recent rise in U.S. bond yields has caused a significant tightening of the financial environment, which may make the Fed's action less necessary. We must wait and see what happens, as rising bond yields may mean the Fed doesn't need to raise rates more.

However, Powell also cited uncertainties and risks to monetary policy, including recently elevated geopolitical risks.

After Powell's speech, markets were inclined to bet that the Fed had completed its current round of rate hikes. Futures tied to the Fed's policy rate are now digesting expectations of less than a one-third chance of another rate hike this year, down from about 40% before Powell's speech.

Overall, Powell's speech clearly signaled that there would be no rate hike at the November policy meeting, but it was also open to a further rate hike. Looking at Powell's recent speeches, he never signals a clear halt to rate hikes but is always open to another rate hike which requires a big change in data.

The U.S. seeks to buy 6 million barrels of oil for reserve at a higher price than before

The U.S. Department of Energy (DOE) said on Thursday it wants to buy 6 million barrels of crude oil to replenish the Strategic Petroleum Reserve (SPR), with 3 million barrels for December receipt and 3 million barrels for January receipt next year, as it continues its plan to replenish the emergency stockpile. It will continue to replenish the reserve through monthly tenders until at least May 2024, with the exact amount yet to be determined, the Energy Department added. The DOE wants to contract at $79/bbl or less, a price higher than the earlier range of around $70/bbl, but below the current $90/bbl for WTI crude oil. The Biden administration has said it hopes its repurchase strategy will provide good taxpayer returns.

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