观点

• Macro: The Fed chair damped hike expectations while industrial output ran hotter than forecast • Equities: US equities suffered another AI-led selloff, Europe outperformed as investors rotated into defensive sectors, Asian markets remained under pressure.

To assess downside protection, we examined the bottom decile of monthly S&P 500 total returns (47 observations) and evaluated which asset classes historically held up best during these periods.

Even more notable, US investment-grade credit and Treasuries generated positive average returns, providing both absolute and relative downside protection during the S&P 500’s weakest months.

The S&P 500 rose 0.3%, whilst the Nasdaq closed marginally lower, weighed by a second consecutive session of chipmaker declines; the Dow added modestly.

According to FactSet, 86% of the companies in the S&P 500 Index reported better-than-expected earnings in the second quarter, the highest proportion in five years.

The S&P 500 fell 1.11%, marking its worst session since July, with eight of the 11 sectors closing lower.

The S&P 500 closed 0.02% lower at 7,805.45, the Nasdaq 100 fell 0.31% to 30,569.48, the Dow shed 0.35% to 51,675.16 and the Russell 2000 slipped 0.40%.

SPX options price a 39.7 point expected move, 0.51%, for today's expiry, and 65.3 points, 0.84%, into Friday 16 October.

None of those drivers has anything to do with the others, which is why the S&P 500 absorbed all of them to finish 0.02% lower.

The S&P 500 closed 0.06% lower at 7,807.24, the Nasdaq 100 fell 0.71% to 30,664.70, the Dow added 0.38% to 51,856.18 and the Russell 2000 slipped 0.45% to 2,794.48.

SPX option-implied expected move: 27.0 points, or 0.35%, for today's expiry and 70.6 points, or 0.90%, for Friday 16 October.

S&P 500 buybacks, USD bn Dec 2017: TCJA tax bill enacted COVID $1 trillion Wall Street forecasts: $1.4 trillion The Global Competition for Capital / OCT 2026 / page 37 Historic AI Capex Supercycle5 Largest Infrastructure Project in History A.

Yeaman's central case is that four rate rises this year will continue to slow economic activity, giving the RBA time to assess how much more work is needed to bring inflation back to target.

“The structural view says low productivity, high public spending, the Al capex boom and a rising neutral rate mean policy is not yet restrictive enough, inflation will be persistent and the RBA will have to inflict more pain on households.

CommBank expects September-quarter trimmed mean inflation to come in at 1.0%.

While November remains a hold in CommBank's central forecast, Yeaman said the outlook beyond that had become more uncertain due to the continuing pressure on inflation.

Trimmed mean inflation remains around 3.5%, and a range of longer-term forces could make inflation harder to bring down than in previous cycles, Yeaman said, pointing to weak productivity, high public demand and strong investment in areas including AI, data centres, energy, defence, transport and housing.

He said inflation is still too high but broadly in line with expectations.

The biggest upside surprise, however, came from the core CPI: at 0.33% m/m (consensus: 0.2%, prior: 0.3%) and 2.6% y/y (consensus: 2.5%, prior: 2.4%); as services remained sticky while goods accelerated to 0.3% m/m on autos and AI-related items.

US: No Good News on Inflation This Month The inflation data this week produced a trifecta of upside surprises, starting with the consumer price index on Wednesday, producer price index on Thursday, and (to a much lesser extent) import prices on Friday.

Even so, a meaningful slowdown next month will be needed to ease concerns that the shelter disinflation process has stalled or ended.

We expect a recovery to take hold from late 2027 as energy prices ease and inflation retreats.

Today, two risks appear particularly relevant: a slowdown in growth if the AI-driven expansion begins to fade, and a resurgence of inflation and interest rate pressures.

Results are descriptive rather than predictive, and conclusions regarding inflation/rates shocks should be interpreted cautiously given the eight-observation sample.

Yet underlying inflation remains stubbornly high relative to both the rest of Europe and the National Bank of Romania’s (NBR) target.

The NBR’s August Inflation Report cited geopolitical tensions involving Iran and low Danube water levels – which constrained hydro and nuclear output – among the factors pushing fuel and electricity costs higher, prompting the bank to raise its end-2026 inflation forecast to an optimistic 6.1%.

A temporary shock that leaves wage negotiations and pricing behaviour unchanged eventually vanishes from the inflation rate; a shock embedded into contracts and expectations does not.

Because food, fuel, and utility bills are the prices consumers observe most frequently, repeated spikes encourage households and workers to anchor their decisions to the most recent inflation prints rather than the central bank's target.

Higher indirect taxes and administered prices initially raise the CPI.

The NBR and monetary policy: constrained, not cosmetic Despite inflation sitting well above the NBR’s 2.5% target, expectations have not fully de- anchored.

Professional forecasters still see longer-term inflation near the top of the target band (with the NBR projecting 3.4% by the end of 2027), showing the target still anchors the destination.

Investment and borrowing decisions depend on expected inflation over the period during which those decisions pay off.

• BoC surveys will probably show higher inflation expectations • China’s economy beat expectations • Global Week Ahead —It Will Only Make Canada Stronger (reminder here ) This is Canada’s day.

Key will be the core measures including traditional core, weighted median and trimmed mean CPI.

BOC’S SURVEYS TO REFRESH INFLATION EXPECTATIONS The Bank of Canada’s twin consumer and business surveys for Q3 will be refreshed at 11:30amET.

Expect them to show a pick-up in inflation expectations in keeping with fresher and timelier small business surveys.

Macklem summed it up by saying “The question we’re going to be asking ourselves is inflation likely to come back down towards our target on its own, or are we going to have to raise interest rates to influence the path.” Ergo, October is definitely a ‘live’ meeting.

Given that the Bank of Canada has a poor track record of forecasting inflation by missing inflection points and understating inflation waves, I think they should take out insurance against the risk of inflation being higher and more persistent than they are forecasting.

Chart 1 provides the evidence; each line shows the BoC’s inflation forecast drawn from past MPRs and compares it to the actual line.

We’ve now slightly revised up our forecast for inflation for the first half of 2027.

Needless to say, forecasts of headline inflation, in particular, are subject to significant revision given the uncertain outlook for the Middle East conflict and uncertainty about how that will be reflected in global energy prices.

Ahead of this week’s important Q3 CPI report – which could prove decisive – we have made no changes to our forecast for the RBNZ’s policy settings.