Kospi Rebounds 3.3% as Fed Hike Bets Ease
Friday, 16 October 2026 — Asian stocks rebounded, and US futures rose as traders pared bets on a Fed rate hike this month after Fed Chair Kevin Warsh gave no signal on whether more tightening is needed.
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In brief
Asian stocks rebounded, and US futures rose as traders pared bets on an October Fed hike after Fed Chair Warsh gave no signal on further tightening.
US producer prices posted their biggest monthly gain since 2022, and the Fed's Hammack warned that the Fed may need to move more aggressively if an inflationary mindset takes hold.
Bundesbank President Joachim Nagel said the ECB cannot rule out further rate hikes if the situation persists, and Rehn and Kazaks backed a measured approach with no rush.
The BoE's Bailey said second-round effects from higher energy prices look subdued so far, but that it is too early to form strong views.
Oil fell after the IEA said member countries will speed up the release of their remaining emergency stocks, including diesel.
Indonesian stocks plunged after MSCI said it is consulting on a downgrade of the country to standalone status.
Trump said the US may strike Iran's Pickaxe Mountain site but ruled out nuclear weapons and ground troops.
Today's Macro Roadmap: final euro-area inflation at 11:00 CET, the BoC's Alexopoulos at 14:00 CET, Canadian housing starts at 14:15 CET, US import prices at 14:30 CET, US industrial production at 15:15 CET, and Zelenskyy at the EU leaders' summit in Brussels.
The full briefing
Asian stocks rebounded, and US futures rose as traders pared bets on a Fed rate hike this month after Fed Chair Kevin Warsh gave no signal on whether more tightening is needed (BBG) (Reuters). The Kospi rose 3.3% to 5,739 as the selloff in chip stocks eased, recovering part of yesterday's slump to its lowest close since April (BBG). Nikkei 225 futures rose 1.5% to 65,790, S&P 500 futures 0.2% to 7,804, and Nasdaq 100 futures 0.2% to 30,197. Wall Street closed higher yesterday, led by the Dow, as investors moved into Treasuries after a hot wholesale inflation reading (WSJ).
Stocks
In stocks, MSCI's Asia-Pacific index climbed as Samsung Electronics and SK Hynix advanced (BBG). Hong Kong's Hang Seng rose 0.9% to 24,291, and the CSI 300 was little changed at 4,167. India's Nifty 50 rose 0.5% to 23,106. Indonesian stocks had their biggest drop since the 2008 financial crisis after MSCI launched a consultation on downgrading the country from emerging-market to standalone status, citing concerns about suspected coordinated trading (WSJ). South Korea's finance ministry said authorities will respond sternly to market-disturbing behaviour (LS). Euro Stoxx 50 futures rose 0.8% to 6,229 and DAX futures 0.6% to 25,654. VIX futures fell 0.12 points to 17.8.
The Fed
Regarding the Fed, Warsh said "I don't prejudge meetings" at the IMF and World Bank annual meetings in Bangkok, and that the Fed "removed a dose of accommodation" with its September hike (Reuters). He said the world economy is showing a resilience he might not have predicted five months ago, that AI will hit the demand side of the economy before the supply side, and that the Fed needs to think about financial-stability risks (LS). He described AI as potentially the most consequential change to the economy in his lifetime and a positive supply shock over the medium term (BBG). He also said the US is seeing an investment surge (BBG), and announced that his productivity and jobs task force will hold a field hearing in the San Francisco Bay Area on 16 November (BBG). Cleveland Fed President Beth Hammack said the Fed might need to move more aggressively if an inflationary mindset takes hold, and that financial conditions do not appear restrictive (Reuters). Most of Warsh's colleagues have said more tightening is probably needed, and markets are betting the Fed will wait until December (Reuters).
US producer prices rose 1.3% m/m in September, more than double the consensus, after 0.5% in August (CNN) (CNBC). It was the biggest monthly gain since March 2022, and the annual rate rose to 6.3% from 5.6% (CNN). Core producer prices rose 0.7%, the fastest pace in five months (CNN). Economists now expect core PCE inflation to accelerate to 0.32% m/m in September from 0.25% (CNBC).
Retail sales rose 0.8% m/m in September and 6.3% y/y, and August was revised up to 1.3% from 1.1% (US Census Bureau). Excluding gas stations, sales rose just 0.2% (CNN). The Empire State index climbed eighteen points to 25.5, its highest level in nearly five years (New York Fed). The Philadelphia Fed's activity index fell to 20.9 from 37.8, and its prices received index rose to 40.1, the highest since May 2025 (Philadelphia Fed).
The euro area
In the euro area, Bundesbank President Joachim Nagel said the ECB cannot rule out further action if the situation remains as it is (BBG). Finland's Olli Rehn said a "measured" approach is the right stance and that the December projections will give more information on growth and inflation (BBG). He warned against jumping the gun on the idea that tighter financial conditions limit the need for ECB action (BBG), and said the growth outlook is better than at the start of the year (LS). Latvia's Martins Kazaks said the ECB is in no rush and not behind the curve, adding that upside risks to inflation still outweigh downside risks to growth (BBG).
The UK
In the UK, Bank of England Governor Andrew Bailey said it is too early to form strong views on second-round effects from higher energy prices, and that the evidence so far is quite subdued (Reuters). He warned that the longer energy prices stay high, the more companies may raise prices, and said the economy is proving more resilient than expected (FT). Inflation stands at 3.1%, and traders have been betting the Bank will raise rates on 5 November (FT).
Japan
In Japan, Bank of Japan board member Junko Koeda said the Bank should not become overly cautious about raising rates (Japan Times). A Reuters poll shows core inflation likely rose to 2.1% y/y in September from 1.7%, above the BoJ's 2% target for the first time since December (Reuters). Growth Minister Kiuchi said he did not seek to delay a BoJ rate hike at the June meeting, and Finance Minister Satsuki Katayama said Japan has moved away from large-scale extra budgets (LS). In Canada, Bank of Canada Governor Tiff Macklem said the longer it goes on, the harder it is to look through rising energy prices (LS).
Currencies
In currencies, the dollar index edged down 0.1% to 101.94 as traders scaled back bets on Fed tightening (BBG). The euro was little changed at 1.1223 dollars, and sterling rose 0.1% to 1.3294 dollars. The yen edged up 0.1% to 157.87 per dollar. The Australian dollar rose 0.3% to 0.6941 and the New Zealand dollar 0.5% to 0.5649. The Swiss franc edged down 0.1% to 0.8274 per dollar. The People's Bank of China set the yuan's reference rate much weaker than expected, and the offshore yuan was little changed at 6.6885 (LS). South Korea's won rose 0.3% to 1,337.68 per dollar, and Japan and South Korea agreed to extend their currency swap pact, NHK reports (LS). India's rupee rose 0.1% to 94.91 per dollar. The Indonesian rupiah weakened after the MSCI announcement (WSJ).
Bonds
In bonds, Treasuries edged lower after yesterday's rally, which saw the ten-year yield's largest one-day drop in more than a year (WSJ). The ten-year yield rose 0.8 basis points to 5.09% and the thirty-year 1.0 basis point to 5.43%. The five-year was little changed at 4.90%. Japan's ten-year yield rose 4.7 basis points to 2.95%, and Australia's ten-year yield rose 2.3 basis points to 5.24%. Bund futures were little changed at 121.64. French Finance Minister Roland Lescure said the bond market is helping him keep parties honest and said he is optimistic parliament will back his budget, which includes €43 billion in measures to cut the deficit (BBG). Some investors suspect China has been moving its US Treasuries to custodian banks in other countries, including Canada, rather than selling them (BBG).
Commodities
In commodities, WTI fell 2.3% to $95.76 a barrel after the International Energy Agency said member countries will speed up the release of their remaining emergency stocks of about 100 million barrels, including more than 20 million barrels of diesel (WSJ). The total released will exceed the 400 million barrels agreed in March (WSJ). Brent fell 0.5% to 107.13 dollars. US Central Command said transit through the Strait of Hormuz continues and the primary routes are clear of mines (LS). US commercial crude inventories fell by 8.6 million barrels last week (WSJ). Gold edged up 0.1% to 4,173 dollars an ounce. Silver rose 0.4% to 57.65 dollars and copper 1.2% to 6.63 dollars a pound. Natural gas fell 0.8% to 3.211 dollars. Bitcoin was little changed at 82,094 dollars, and Ether rose 0.2% to 2,446 dollars.
Geopolitics
In geopolitics, President Donald Trump told Newsmax that the US may strike Iran's Pickaxe Mountain site, said he would not use nuclear weapons or send ground troops, and predicted the war will end very soon (Newsmax). Iran told Hezbollah to prepare for a resumption of the US war, two diplomatic sources told the Jerusalem Post (JPost). European leaders at their summit in Brussels are preparing for a world in which Trump sides with Moscow, after he trashed energy sanctions on Russia and pressed Kyiv to stop striking Russian oil refineries (BBG). EU leaders broadly backed developing a "kill switch" trade tool that could quickly eject Chinese companies from the bloc's market (SCMP). The European Commission has begun assessing chemicals and machinery for import quotas, using its cap on Chinese hybrid cars as a blueprint (BBG). Progress towards a US-Mexico tariff deal has stalled after Commerce Secretary Howard Lutnick opposed significant cuts in the tariffs on Mexican cars, steel and aluminium (WSJ).
Corporate news
In corporate news, Nvidia Chief Executive Jensen Huang defended CoreWeave, saying its strength is improving every day and its cost of capital is falling, and CoreWeave shares rose yesterday (BBG). Three CoreWeave co-founders have sold 3.3 billion dollars of company shares since last year's IPO (BBG). Some Anthropic investors are weighing a valuation of around $1.5 trillion for its November IPO, down from roughly $2 trillion expected before, after its quarterly revenue growth slowed (Reuters). European banks including Societe Generale, Deutsche Bank and BNP Paribas are expected to report lower fixed-income trading revenue for the third quarter, echoing their US peers (BBG). TSMC shares fell yesterday despite earnings growth (WSJ). Taiwan plans to raise billions of dollars to build industrial parks in the US for the supply chain of Nvidia and other AI hardware makers, and is preparing to tighten export controls on AI chips to align with US restrictions (BBG). Schneider Electric's sales grew at the fastest pace in five years, and the company raised its guidance for a second time this year on data-centre demand (BBG). UniCredit received ECB approval for its takeover of Commerzbank, and Moody's changed its outlook on Nike to negative (LS). Google said a technique called magic state cultivation cut errors about 40-fold on its Willow quantum processor (Google).
What I am reading
In other news, this article caught my eye: How Iran's precision strikes picked apart Gulf infrastructure (Reuters). The investigation examines the damage that Iran's strikes have done to infrastructure across the Gulf states (Reuters).
Data and the day ahead
Data and the day ahead: New Zealand's manufacturing PMI rose to 56.5 in September from 53.3, card spending fell 0.4% m/m after -0.9%, and food prices rose 2.4% y/y from 1.9%. Foreign investors bought ¥3,521.5b of Japanese stocks in the week to 10 October, up from ¥2,199.7b. Still to come: final euro-area inflation for September at 11:00 CET, where consensus looks for 3.8% y/y from 3.2% in August and core inflation at 2.5% from 2.4%, with Italy's final figures at the same time. Bank of Canada Deputy Governor Alexopoulos speaks at 14:00 CET, and Canadian housing starts follow at 14:15 CET, with consensus at 232.5k from 229.0k. US import prices are due at 14:30 CET, with consensus at 0.8% m/m from 0.7%, and export prices at 1.0% from 0.6%. The day's main US release is industrial production at 15:15 CET, with consensus at 0.4% m/m from 0.0%, manufacturing output at 0.3% from -0.3%, and capacity utilisation at 76.5% from 76.3%. The US budget statement follows at 20:00 CET and TIC flows at 22:00 CET. Ukraine's Volodymyr Zelenskyy addresses the EU leaders' summit in Brussels today (BBG). Next week, Japan's national inflation data for September are due on 23 October (Reuters).
Time Stamp: 16 October 2026, 07:54 CET
Editor's Note
Three threads to carry through the day.
The first is the Fed. Warsh declined to guide, and bets on an October hike faded even though producer prices just posted their biggest monthly gain since 2022 and economists now expect a faster core PCE reading. Today's import prices and industrial production are second-tier releases, so the hike debate will likely run into the end-of-month meeting.
The second is the AI trade. The Kospi's rebound and Huang's defence of CoreWeave steadied the chip complex, but talk of a lower Anthropic valuation and strain in CoreWeave's bonds suggest investors are testing AI financing, not demand.
The third is Europe. Nagel, Rehn and Kazaks are keeping further tightening in play while saying there is no rush, and today's final inflation figures are the next data point. The EU summit's stance on Russia and China and France's budget fight are the risks that could move euro-area bond spreads.
Yesterday's Briefing: Chip Rout Sinks Kospi 8.5% as Treasuries Rally and the Dollar Slides
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Tags: Fed Chair Warsh Bangkok, Kospi rebound, US producer prices, ECB rate hike, Bank of England Bailey, emergency oil stocks release, MSCI Indonesian stocks, Anthropic IPO valuation