Thursday morning brings a data triple that will test the Federal Reserve’s decision to hold rates. Third quarter GDP, September PCE inflation and jobless claims are all due at 8:30 in the morning Eastern time, hours after the Fed held its benchmark at 3.75 percent to 4.00 percent in a 10-2 vote, with two officials dissenting in favour of a hike. Consensus expectations put GDP growth at 3.0 percent, PCE inflation at 3.6 percent year on year and core PCE at 3.1 percent. The actual prints will either support the majority’s patience or strengthen the dissenters’ case.
The Fed’s own statement upgraded its economic assessment to strong and noted that inflation remains elevated. Chair Kevin Warsh said real growth was tracking toward 3 percent, driven by resilient consumer spending and broad based business and artificial intelligence investment. A GDP print near consensus would confirm that picture. A PCE print above consensus would make the case for a December hike, already priced at roughly 85 percent by futures markets, harder to resist. A softer PCE print would give the majority room to argue that waiting is working.
The European decision, hours later
The European Central Bank decides at 9:15 Eastern time, with a hold at a 2.50 percent deposit rate expected. The pairing of the two decisions in one morning is a reminder that monetary policy is now a global conversation: the Fed’s hold and the ECB’s expected hold both reflect central banks that see growth holding up and inflation still above target, and both are reluctant to move without clearer data. The 10 year Treasury yield’s jump to 5.050 percent after the Fed decision shows how sensitive bond markets are to any hint that the next move is a hike rather than a cut.
After the close, attention turns to earnings, with Amazon, Intel, Sandisk and Gilead reporting. Wednesday’s after hours split, Microsoft up about 4 percent on a beat driven by Azure growth of 48 percent, Alphabet down about 10 percent on a miss and negative free cash flow after 51.4 billion dollars of capital spending, has already set the theme: investors are separating companies whose artificial intelligence spending turns into revenue from those whose spending runs ahead of returns. Thursday’s market open will reflect that split, with Nasdaq futures already lower on Alphabet’s miss.
What the day will decide
By Thursday evening, the market will have a clearer view of three questions: whether growth is as strong as the Fed thinks, whether inflation is as sticky as the dissenters fear, and whether the earnings season’s AI story is about returns or about spending. None of those questions will be settled by a single print, but together they will shape expectations for December, and for the first quarter of next year. The Fed chose to wait on Wednesday. Thursday’s data will show whether waiting was wise.
