2026 US Economic Outlook (Gemini) – Updated October 17

Third week of October 2026: Latest topics in the US economy

1. September CPI +3.7%, PPI +6.3%—Prices are accelerating, yet an ‘October rate hike’ has receded

The September CPI released on October 14 was +3.7% year-on-year (forecast +3.6%), and the core CPI was +0.3% month-on-month, exceeding expectations. The September PPI released the following day, the 15th, was +1.3% month-on-month and +6.3% year-on-year, the highest level in four years. Nevertheless, on the 16th, when Fed Chair Warsh indicated he had no preconceived notions about the conclusion of the October FOMC, the probability of an October rate hike fell from about 27% to less than 15%.

• Immediately after the CPI upside surprise, the market pricing for an October rate hike had doubled from about 22% to about 44%

• September retail sales were solid at +0.8% month-on-month (forecast +0.3%), and consumption has not collapsed despite high gasoline prices

• Goldman Sachs expects a hold in October, with the final rate hike of the year in December

How to read the phase: A phase where ‘prices are strong, but the Fed is in no rush.’ Even if indicators are strong, the market can reverse on a single comment from the Chair, so the market is likely to be dependent on statements until the October 27-28 FOMC.

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2. S&P 500 and Nasdaq have their worst week since the end of June—’Funding anxiety’ in AI-related sectors is the spark

The closing prices on October 16 were $52,002.41 for the Dow (-0.34%), 7,659.44 for the S&P 500 (-1.09%), and 26,140.04 for the Nasdaq Composite (-2.14%). The Philadelphia Semiconductor Index fell over 11% for the week.

• The Dow was up $556 on the previous day, the 15th, with consumer and healthcare stocks being bought while AI-related stocks were sold off

• The focus has shifted from ‘AI demand’ to the borrowing and investment recovery of AI-related companies

• The next catalyst is Meta’s earnings. It will be tested whether growth commensurate with AI investment can be confirmed

How to read the phase: The ‘rise skewed toward large-cap AI stocks’ pointed out last week has become the entrance to a correction. The fact that stocks are not recovering even as interest rates fall is a sign that the material has shifted from interest rates to ‘AI funding’.

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3. WTI at $101.41, a one-month high—Attacks intensify around Hormuz

WTI (November delivery) closed at $101.41, up $3.44 on October 16, marking its seventh consecutive day of gains. Brent was $109.86 (+3.7%).

• Iran is intensifying attacks around the Strait of Hormuz, and the Houthis have also attacked Saudi Arabia

• Despite Mr. Trump’s statement last week that ‘there will be no attacks before the election,’ vigilance against the resumption of US-Iran hostilities has increased

• Government agencies have secured funding until December 11 through a continuing resolution, and statistical releases are proceeding as normal

How to read the phase: The premise from last week of a ‘lull until the election’ is crumbling. Oil over $100 affects prices, interest rates, and stocks in three directions, making it the biggest risk factor this week.

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‘3 Action Advices’ that Japanese individuals should take now

1. Exchange Rate: Focus on a range of 156.5–159.5 yen, using time diversification

The dollar-yen is around 158 yen. There are instances of the yen strengthening due to a decline in US 10-year Treasury yields, and reports of a December rate hike by the Bank of Japan are also providing support for the yen.

• Use a weekly range of 156.5–159.5 yen as a guide, and split currency exchanges and foreign currency purchases into several transactions

• Check the FOMC meeting on October 27–28 and the Bank of Japan meeting around October 30 in advance

• Do not chase the rate above 160 yen, as there is strong caution regarding intervention by Japanese and US authorities

2. Stock Investment: Avoid lump-sum investments during the ‘AI correction’ phase

The S&P 500 has entered a correction phase from last week’s all-time high.

• Continue with installment investments, but avoid new lump-sum investments

• If the price falls below the 7,600–7,900 range assumed by Gaitame.com, prepare for further downside

• Review your portfolio for over-concentration in AI-related stocks

3. Inflation and Energy Measures: Review fixed costs assuming crude oil exceeds $100

Rising gasoline prices are pushing up the CPI, and the upward surprise in the PPI could spill over into future retail prices.

• Review your budget in advance to prepare for increases in variable costs such as utilities, gasoline, and food expenses

• For variable-rate mortgages, calculate the repayment amount in the event of a rate hike