Global Economic & Credit Market Briefing

CPI

• Headline CPI rose 0.6% MoM in September, in line with consensus, lifting the annual rate to 3.7% from 3.4%, where it had held for two months. The annual rate was above the 3.6% FactSet consensus. Gasoline jumped 9.1% and accounted for more than half of the monthly increase, and airfares are up 22% YoY on higher jet fuel costs
• Core CPI rose 0.3% MoM, lifting the annual rate to 2.6% from 2.4%, above the 2.5% forecast. Carson Group noted core inflation ran at a 3.7% annualized pace in September, so the pressure is no longer just fuel. Economists also point to tariffs, AI data center construction and strong travel demand
• The print drives the 2027 Social Security COLA to 3.6%, up from 2.8%. With the Fed meeting October 27–28, a hot core reading undercuts the case for a pause that the softer August PCE had supported

Retail Sales

• Retail sales rose 0.8% MoM to $745.0B in September, well above the 0.3% consensus, and August was revised up to +1.3% from +1.1%. Sales are up 6.3% YoY, and excluding autos they rose 0.9%
• The headline overstates demand. Gas station sales jumped 6.4% and drove about 71% of the gain, and excluding gas stations, sales rose only 0.2%. Because the data is not adjusted for inflation, part of the gain reflects higher prices rather than more buying, and real incomes have fallen over the last six months
• Underneath, demand is softening: online sales slowed to 0.3%, auto sales to 0.2%, and building materials fell 0.6%. Retailers still expect holiday spending of $1 trillion, up 4.2% from 2025, but consumers look increasingly stretched by energy costs

PPI

• Producer prices jumped 1.3% MoM in September, more than double the 0.5–0.6% consensus and the biggest monthly gain since March 2022. The annual rate rose to 6.3% from an upwardly revised 5.6%, the highest since December 2022. Goods prices rose 2.6%, the largest increase since the series began in 2009
• Energy drove more than 80% of the goods increase, with energy up 10.8% and gasoline up 20.3% at the producer level. Upstream, crude petroleum rose 28.3% and diesel 21.0%, which points to more pass-through to consumers in the coming months
• The spillover is showing in core measures. PPI excluding food, energy and trade services rose 0.5% MoM and 5.0% YoY, and prices outside energy still rose about 0.7% in the month. Together with CPI, this makes it harder for the Fed to argue the energy shock is contained

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S., increased to 199,000 in the week ended October 9, up 1,000 from the prior week.
• The four-week moving average was 198,500, up 250 from the prior week.
• Continuing claims — those filed by workers unemployed for longer than a week — decreased at 1.710 million in the week ended October 2. This figure is reported with a one-week lag.

Fed's Balance Sheet

• The Federal Reserve's assets totaled $6.756 trillion in the week ended October 16, up $8.1 billion from the prior week.
• Treasury holdings totaled $4.570 trillion, up $5.0 billion from the prior week.
• Holdings of mortgage-backed securities (MBS) were $1.90 trillion in the week, down $1.7 billion from the prior week.

Total Public Debt

• Total public debt outstanding was $40.39 trillion as of October 16, an increase of 6.4% from the previous year.
• Debt held by the public was $32.54 trillion, and intragovernmental holdings were $7.75 trillion.

GDP

• The latest annualized U.S. GDP stands at $32.56 trillion as of June 30, 2026, an increase of 2.06% from the previous quarter, & an increase of 6.31% from the previous year.
• The total public debt-to-GDP ratio is at 121.19% as of June 30, an increase of 2.97% from the previous year.

Inflation Factors

CPI:

• The consumer-price index rose 3.7% in September year over year.
• On a monthly basis, the CPI increased 0.6% in September on a seasonally adjusted basis, after increasing 0.4% in August.
• The index for all items less food and energy (core CPI) rose 0.3% in September, after rising 0.3% in August.
• Core CPI increased 2.6% for the 12 months ending September.

Food & Beverages:

• The food at home index increased 1.8% in September from the same month a year earlier, and decreased (0.1%) in September month over month.
• The food away from home index increased 3.5% in September from the same month a year earlier, and increased 0.2% in September month over month.

Commodities:

• The energy commodities index increased 9.3% in September after increasing 4.2% in August.
• The energy commodities index rose 35.3% over the last 12 months.
• The energy services index fell (0.2%) in September after decreasing (0.6%) in August.
• The energy services index rose 4.6% over the last 12 months.
• The gasoline index rose 34.2% over the last 12 months.
• The fuel oil index rose 74.2% over the last 12 months.
• The index for electricity rose 4.4% over the last 12 months.
• The index for natural gas rose 5.0% over the last 12 months.

Supply Chain:

• Drewry's composite World Container Index increased to $4,485.36 per 40ft container for the week of October 16.
• Drewry's composite World Container Index has increased by 165.8% over the last 12 months.

Housing Market:

• The shelter index increased 0.4% in September after increasing 0.3% in August.
• The rent index increased 0.4% in September after increasing 0.3% in August.
• The index for lodging away from home decreased (0.3%) in September after increasing 0.5% in August.

Federal Funds Rate

• The effective Federal Funds Rate is at 3.88%, up 0.24% year to date.

Money Market Funds

• Money market fund assets stood at $7.92 trillion as of October 14, 2026, down (0.5%) from the previous week, & up 7.5% from the previous year.

Middle East

• Lebanese authorities intercepted a truck carrying more than 1,000 pounds of C-4 and TNT from Hezbollah's Bekaa Valley stronghold toward Beirut. In an unusually public challenge, Hezbollah demanded the explosives back and the release of the two detained drivers. The group says it needs the material to fight Israeli troops occupying parts of southern Lebanon, and Prime Minister Salam has vowed "no leniency"
• The standoff tests the Salam–Aoun government's push to disarm Hezbollah. Hezbollah ignored a March ban on its military activity, and Iran's ambassador refused to leave after being expelled. With Lebanon now holding direct U.S.-brokered talks with Israel, Hezbollah is trying to rebuild its domestic clout, including a roughly $160M housing aid program that U.S. officials doubt it can fund
• The FBI arrested former OpenAI engineering lead Abdulrahman Alfozan three days before he was due to fly one-way to Saudi Arabia. Prosecutors allege he hid a recording device behind a TV in an executive conference room used for top-secret meetings on OpenAI's leading models. He is charged under a federal recording statute, not with trade-secret theft or acting as a foreign agent, and his lawyer has asked the public to withhold judgment
• Alfozan kept close ties to Saudi Arabia's tech scene and has been a venture partner at Riyadh-based Raed Ventures since 2025, alongside a member of the royal family. The U.S. Attorney called the case a matter of national security. It adds to a growing list of alleged attempts to extract U.S. frontier-AI know-how, after the Chinese "distillation" accusations, and increases scrutiny of Gulf capital and talent flows into U.S. AI

Europe

• Russia is pounding Ukrainian cities with mass-produced jet-powered drones and cheap cruise missiles that Kyiv struggles to stop. In September, only 54% of 3,520 jet-powered Geran drones were intercepted, versus about 90% of propeller drones, and very few of 343 Banderol cruise missiles were downed. Ukraine's fastest interceptor prototype reaches 280 mph, while the Geran-5 and Banderol fly at 370–385 mph
• Industry executives say Ukraine may need more than 1,000 high-speed interceptors a week. Jet engines are the bottleneck: Ukraine makes up to 500 a month, China has curbed engine sales to Kyiv while supplying Russia, and domestic engines fast enough to catch the new drones won't arrive until December. Analysts warn that without enough interceptors this fall, mass strikes on energy and defense production could shift the course of the war this winter. Starlink speed caps this week also briefly disabled some interceptor missions
• France and Germany agreed on a joint package for Europe's struggling auto sector. It pairs a continued decarbonization path with more regulatory flexibility and incentives for investment, R&D, European production and resilient supply chains. Details have not yet been released, but the deal follows the Commission's earlier proposal to soften the 2035 target from a 100% to a 90% CO₂ cut from 2021 levels
• European carmakers are under pressure on two fronts. In China, local brands are winning a prolonged price war in a shrinking market, while in Europe, Chinese brands are gaining share as energy costs push up production costs. Combined with the new EU cap on Chinese hybrid imports and the Franco-German push for a Section 301-style trade tool, it signals that Paris and Berlin are now coordinating a defensive industrial policy

China

• China's Ministry of Commerce issued a draft plan to add 40 technologies to its restricted export list, 23 of them in AI, including large language models, AI agents, chip design and computing clusters, along with biomedicine and photovoltaics. Anything already public through published papers or open-source releases is exempt, and public comment runs until November 15
• A temporary registration requirement took effect immediately and covers ownership transfers, overseas licensing and moving technology to foreign entities, including deals already underway. The move fits Beijing's push to lock down its AI edge after it blocked Meta's $2B Manus acquisition in April, and raises the risk for cross-border AI deals and Chinese AI firms expanding abroad
• Beijing agreed to an EU plan capping Chinese hybrid-vehicle imports at 350,000 a year, which officials say cuts current volumes by more than half, with the quota rising 6% a year for three years. The concession reflects China's dependence on Europe now that the U.S. market is largely closed: the EU's deficit with China reached about $1B a day last year, and Chinese exports to the EU jumped 25.3% YoY in September
• Europe's stance is hardening. A joint Franco-German proposal would create a Section 301-style tool to block Chinese goods more easily, and EU leaders have agreed on new instruments to diversify supply chains and shield industries from retaliation. Chemicals are seen as the next sector likely to face measures, though upcoming European elections, especially in France, and the risk of Chinese retaliation could test that unity

Americas

• Alberta holds a nonbinding secession referendum on Monday after years of complaints that Ottawa has held back its oil and gas development, with pipelines to both coasts previously killed by provincial, Indigenous and environmental opposition. The backdrop is weak: Canada's per-capita GDP fell from 85% of the U.S. level in 2014 to 78% in 2022, and the IMF this week cut Canada's 2026 growth forecast to 1.1% from 1.5% as U.S. tariffs hit Ontario and Quebec manufacturing
• WSJ's Greg Ip argues Trump's pressure is helping Carney push through nation-building projects that had stalled for decades. These include a $7B federal investment in a Quebec–Newfoundland hydro project and a new Alberta-to-Pacific oil pipeline due to start construction in a year, and former Alberta premier Jason Kenney says Carney's "energy superpower" pivot has reduced the odds of secession. Durability is the risk: the projects take years, and Quebec separatists, back in power, have promised another referendum once Trump leaves office
• Cleveland-Cliffs plans to lay off up to 500 workers at Stelco's Hamilton operations as it idles galvanized steel lines hit by U.S. tariffs and cheap imports. Ottawa says this breaches job commitments Cliffs made when it bought Stelco for about $2.5B in 2024 and is weighing fines or a forced divestiture under the Investment Canada Act. CEO Lourenco Goncalves denies any breach and blames Carney for walking away from U.S. trade talks in August
• The dispute turns a corporate restructuring into a political fight. Conservatives want a court-ordered sale to a Canadian buyer and the NDP calls for nationalization, with Cliffs reporting Q3 results on Monday. For foreign acquirers in Canada, it is a live test of how strictly Ottawa will enforce investment-approval commitments when trade conditions deteriorate

Russia

• Russia's FSB detained Hokkaido Shimbun journalist Yuki Imai on Sakhalin on espionage charges, the most high-profile arrest of a foreign journalist since Evan Gershkovich, and Tokyo summoned Russia's ambassador in response. The arrest came days after Medvedev threatened to seize Western residents as bargaining chips for prisoner swaps. It follows Putin's first visit to the disputed Kuril Islands and new Japanese sanctions on Russia's shadow fleet, as Moscow and Beijing step up joint military pressure on Japan

UK

• BOE Chief Economist Huw Pill, who has repeatedly voted for hikes, said he is skeptical the bank needs the full 100bp of tightening markets are pricing. He wants clearer evidence of second-round effects before going that far. The BOE has held at 3.75% since December, unlike the Fed and ECB, and is expected to raise rates to 4% in early November, with U.K. inflation at 3.1% driven almost entirely by energy so far

India

• Modi's government locked down central New Delhi with thousands of security forces, closed dozens of metro stations and canceled intercity trains to block a mass protest over the voter-roll cleanup, which activists say has removed some 130 million names. Thousands were reportedly detained, including leaders of the youth-led Cockroach Janta Party, who were taken off their plane on arrival. Voter disenfranchisement is now merging with youth unemployment anger, which puts the government in a bind: firing the election chief would look like an admission, while protests keep growing

Japan

• BOJ Governor Ueda struck another hawkish note in Bangkok, saying the bank remains in tightening mode and that underlying inflation, now "quite close" to 2%, must not be allowed to rise above target. He named the Middle East, AI-driven demand and FX moves as factors in the timing of the next hike, without committing to a date. That keeps a BOJ hike in play just as the Fed weighs its own next move, a live risk for yen carry positioning

Oil Prices

• WTI: $101.73 per barrel
• +10.76% WoW; +35.78% YTD; +74.58% YoY
• Brent: $109.82 per barrel
• +4.87% WoW; +39.81% YTD; +79.86% YoY

U.S. Production

• U.S. oil production amounted to 13.7 million bpd for the week ended October 9, down 0.3 million bpd from the prior week.

Rig Count

• The total number of oil rigs amounted to 603, flat from last week.

Inventories

Crude Oil

• Total U.S. crude oil inventories now amount to 415.6 million barrels, down (1.9%) YoY.
• Refiners operated at a capacity utilization rate of 93.5% for the week, up from 92.7% in the prior week.
• U.S. crude oil imports now amount to 6.840 million barrels per day, down 9.5% YoY.

Gasoline

• Retail average regular gasoline prices amounted to $4.33 per gallon in the week of October 16, up 41.8% YoY.
• Gasoline prices on the East Coast amounted to $4.24, up 38.1% YoY.
• Gasoline prices in the Midwest amounted to $4.24, up 46.3% YoY.
• Gasoline prices on the Gulf Coast amounted to $3.95, up 45.3% YoY.
• Gasoline prices in the Rocky Mountain region amounted to $4.58, up 44.0% YoY.
• Gasoline prices on the West Coast amounted to $5.78, up 33.1% YoY.
• Motor gasoline inventories were up by 3.5 million barrels from the prior week.
• Motor gasoline inventories amounted to 208.3 million barrels, down (4.8%) YoY.
• Production of motor gasoline averaged 9.23 million bpd, down (1.4%) YoY.
• Demand for motor gasoline amounted to 8.408 million bpd, down (0.6%) YoY.

Distillates

• Distillate inventories decreased by 2.5 million in the week of October 16.
• Total distillate inventories amounted to 102.6 million barrels, down (12.3%) YoY.
• Distillate production averaged 5.189 million bpd, up 13.0% YoY.
• Demand for distillates averaged 4.323 million bpd in the week, up 2.1% YoY.

Natural Gas

• Natural gas inventories increased by 67 billion cubic feet last week.
• Total natural gas inventories now amount to 3,567 billion cubic feet, down (3.9%) YoY.

High-yield:

High yield bond yields increased 6bps to 8.22% and spreads widened 11bps to 339bps. Leveraged loan yields increased 7bps to 9.66% and spreads increased 13bps to 501bps. WTD high yield bond returns were almost flat and WTD leveraged loan returns were negative 21bps. HY spreads widened amid concerns over the durability of AI investment, firmer inflation data, and continued fund outflows. BB bonds gained while single-B and CCC bonds weakened, highlighting increasing dispersion across credit quality. Loans underperformed HY, with pressure on CCC-rated loans and cable, telecom, and housing despite continued retail inflows.

Week ended 10/16/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (trading in excess of 1,000 bps)²

Total HY Defaults

Leveraged loans:

Week ended 10/16/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (loan price below $80)¹

Total Leveraged Loan Defaults

Default activity:

• Most recent defaults include: Leslie's Poolmart ($757mn, 09/30/2026), Brightline East ($1.1bn, 09/24/2026), Hughes Satellite Systems ($1.5bn, 08/02/2026), Unifrax Investment ($3.1bn, 07/26/2026), Dish DBS ($9.8bn, 06/30/2026), QVC Group ($2.2bn, 04/16/2026), Cumulus Media ($641mn, 03/05/2026), Trinseo ($390mn, 02/17/2026), Beasley Broadcasting Group ($189mn, 02/01/2026), Nine Energy Service ($300mn, 02/01/2026), Multi-Color ($4.5bn, 01/29/2026).

CLOs:

Week ended 10/16/2026

New U.S. CLO Issuance²

New U.S. CLO YTD Issuance²

Note: High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index

² Source: JP Morgan

Ratings activity:

S&P and Moody's High Yield Ratings

Source: Bloomberg

Appendix:

Diagram A: Leveraged Loan Trading Levels

Source: Credit Suisse Leveraged Loan Index

Diagram B: High Yield and Leveraged Loan LTM Price

Diagram C: Leveraged Loan and High Yield Returns

Diagram J: New Issue - Leveraged Loan and High Yield

Diagram K: Leveraged Loan + HY Defaults by Sector – LTM

Source: JP Morgan Default Monitor

Diagram L: CLO Economics

Diagram M: Developed Country Govt. Bond Yields (%)

Diagram N: S&P 500 Historical Multiples

Source: S&P Capital IQ

Diagram O: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Source: Pitchbook

Diagram P: U.S. Large Cap M&A Valuations (EV/EBITDA)

Source: Pitchbook

Diagram Q: Dry Powder for All Private Equity Buyouts ($B)

Diagram R: Dry Powder for All US Debt ($B)

Diagram S: Structured Credit Spreads

Source: Bloomberg

Diagram T: Structured Credit Yield

Source: Bloomberg

Diagram U: SOFR Curve

Diagram V: CMBS Spreads

Source: Bloomberg