Fed's Kashkari: Inflation Still Too High; Sees One More Rate Hike in 2026 and Another in 2027

Good morning. Today is Thursday, October 1, 2026. Here's your Futures Morning Rush briefing. Top headlines 1) PBOC: On October 8, 2026, the central bank will conduct a RMB 1.2 trillion outright reverse repo with a three-month tenor, maturing January 5, 2027, using fixed-quantity, rate bidding and multi-price allocation. 2) China's Ministry of Commerce: Extended the deadline for its trade barrier investigation into U.S. measures that disrupt global production and supply chains and restrict green-product trade to December 27, 2026. 3) NDRC: RMB 250 billion in ultra-long special government bond funding earmarked for the consumer goods trade-in program has been fully disbursed. 4) NBS: China's September manufacturing PMI rose to 50.1%, up 0.3 percentage points from August, returning to expansion. 5) China freight: As of September 30, the Shanghai Containerized Freight Index (SCFI) fell 24.32 points to 3,662.30; the China Containerized Freight Index (CCFI) rose 0.3% to 1,923.93. 6) U.S. macro: BEA data show inflation-adjusted personal spending rose 0.6% m/m in August, the biggest monthly gain since March 2025. 7) U.S. inflation: The August core PCE price index rose 3% y/y, easing from the prior month and marking the lowest since February; consensus was 3.3%. 8) U.S. politics: President Trump said the final batch of U.S. troops are leaving Iraq. 9) Fed: Minneapolis Fed President Neel Kashkari said inflation remains a concern even after recent softer data. He said inflation is still around 3% and has been elevated for more than five years, adding that the latest readings do not materially change the picture. Kashkari said he expects one more rate hike in 2026 and another in 2027, and that Fed tightening is unlikely to materially affect investment in large-scale cloud computing firms. He also said the recent rise in bond yields is a global phenomenon. 10) U.S.-Iran: Axios reported that after U.S.-Iran talks stalled, Rubio asked Iran's U.N. delegation on Monday to leave the United States, a rare diplomatic rebuke highlighting entrenched mistrust. Global futures moves (latest close) • Energy: Front-month WTI rose 1.07% to $90.34/bbl (+9.82% in September; +38.08% in Q3). Front-month Brent rose 1.79% to $97.88/bbl (+13.21% in September; +49.63% in Q3). • Precious metals: COMEX gold +0.22% to $4,189.10/oz (-6.52% in September; +2.21% in Q3). COMEX silver -0.65% to $60.76/oz (-9.31% in September; +0.17% in Q3). • Base metals (LME): Tin +0.14% to $54,275.0/t (+5.25% in Q3); Copper -0.23% to $14,405.0/t (+7.7% in Q3); Nickel -0.24% to $15,920.0/t (-2.25% in Q3); Aluminum -1.37% to $3,170.0/t (+2.74% in Q3); Lead -1.40% to $1,871.5/t (-0.19% in Q3); Zinc -1.41% to $3,815.5/t (+7.43% in Q3). China ferrous and coal — key updates • Shaanxi: The provincial NDRC held a meeting on stabilizing coal production and supply, calling for safe output, fewer unnecessary shutdowns, faster restarts, and shorter stoppages to support energy security. • Coke: Major steelmakers in Hebei, Shandong, Tianjin and elsewhere confirmed a first-round cut in coke purchase prices, effective 00:00 on October 1: wet-quenched coke -RMB 100/ton; dry-quenched coke -RMB 110/ton. • Coal mines: Mysteel said one additional mine in Qinyuan County, Changzhi City resumed production with approved capacity of 9 million tons; five more mines are scheduled to restart in October with combined capacity of 48 million tons. • Brazil iron ore: Overseas media reported CSN Mining will temporarily reduce low-grade iron ore output due to higher Brazil-China shipping costs, and cut its 2026 production and procurement forecast to 39–41 million tons. • Indonesia coal: The Energy and Mineral Resources Ministry (ESDM) approved about 95% of 2026 RKAB applications; ESDM expects 2026 coal output around 720 million tons. • Construction materials (Zhonggang): Week ending September 30 output was 4.2235 million tons (-105,000 t w/w); inventories 9.3028 million tons (-543,200 t w/w); apparent demand 4.7667 million tons (-328,500 t w/w). • Rebar (Mysteel): Week ending September 30 production was 1.7223 million tons (+68,800 t w/w); social inventory 4.1512 million tons (-244,700 t w/w); apparent demand 1.9815 million tons (-107,000 t w/w). • Imported iron ore: Mysteel reported inventories at 45 ports totaled 164.1084 million tons, down 85,000 tons. • Steel mills: Mysteel survey of 247 mills showed blast furnace utilization at 81.53% (-0.48 pp w/w); average daily pig iron output 2.3379 million tons (-18,700 t w/w; -80,200 t y/y). Agriculture • USDA Quarterly Stocks: As of September 1, 2026, U.S. old-crop soybean stocks were 315 million bushels versus expectations of 324 million and 316 million a year earlier. • Indonesia palm oil: The October CPO reference price was raised to $1,042.15/ton from $1,007.51, lifting the October CPO export tax to $178/ton from $148. • U.S. soy exports: USDA data showed a private exporter reported sales of 1.05 million metric tons of soybeans to an unknown destination for 2026/27 delivery. • Malaysia palm exports: ITS estimated September 1–30 exports at 1,131,592 tons (-17.1% m/m). AmSpec estimated 950,957 tons (-28.8% m/m). • India edible oils: Industry officials projected 2026/27 edible oil imports of 16.5–17 million metric tons, with palm oil imports steady around 8 million. • Sugar outlook: StoneX forecast a 900,000-ton global sugar deficit in 2026/27. For 2027/28, Brazil's Center-South cane crush is projected at a record 662 million tons, with sugar output seen at 42.4 million tons, near the 2023/24 peak. • India sugar policy: The government set a domestic sugar sales quota of 1.4 million metric tons for October 1–15, 2026. Energy and chemicals • EIA: Week ending September 25, U.S. commercial crude stocks (ex-SPR) rose 922,000 barrels to 427 million (+0.22%). SPR stocks fell 785,000 barrels to 283.8 million (-0.28%), the lowest since the week ending October 22, 1982. • Iraq pricing: Documents showed SOMO offered October contract crude at discounts of up to $37/bbl versus regional benchmarks. • Fujairah: UAE Fujairah Oil Industrial Zone data showed refined product inventories at 8.216 million barrels for the week ending September 28, down 2.08 million w/w. • China methanol: Longzhong reported port inventories at 393,500 tons as of September 30 (-18,500). Sample producer inventories were 281,700 tons (+16,500), up 6.22% m/m. • U.S. diesel: Financial Times reported President Trump held crisis talks on whether to impose a diesel export ban or take other steps to address a fuel crunch. • Russia: The government extended the diesel export ban for fuel producers through end-October. Metals and materials • Polysilicon (China): The Silicon Industry Association said September output was about 120,400 metric tons (+1.3% m/m), a net increase of 1,450 metric tons. October output is expected to fall to about 105,000 metric tons (-12.9% m/m). • Polysilicon cuts: Baichuan Yingfu said multiple producers reduced October plans, with output falling from 116,000 metric tons in September to 91,600 metric tons in October. • Chile copper: INE data showed August copper output fell 13% y/y to 369,500 metric tons, the lowest monthly level since February 2011. • South Korea gold: MoneyToday reported the Bank of Korea will buy 1 ton of domestically produced gold in December, its first physical gold purchase in 13 years. • Lithium ore: Mysteel said inventories held by 19 overseas mining lithium salt producers were 435,000 tons in September, down 55,000 tons m/m. • Alumina: The International Aluminium Institute reported global alumina output of 13.178 million tons in August 2026, with daily average production of 425,100 tons; July was revised to 13.024 million tons. Key upcoming data and events • October 1, 22:00: U.S. September ISM Manufacturing PMI. • October 2, 03:00: USDA U.S. Oilseeds Crush Report. • October 2, 20:30: U.S. September nonfarm payrolls and unemployment rate (seasonally adjusted). • October 4: OPEC+ JMMC and the seven-nation monthly production meeting.