Dizzying day.

Inflation is spreading deeper into the US economy, slamming the door on hopes the Federal Reserve will dial back interest-rate hikes that threaten to tip the country into recession. Core inflation, excluding food and energy, jumped to a 40-year high of 6.6% in September from a year ago, triggering a slide in US bond markets as investors bet the Fed will be forced into two more 75 basis-point increases this year. Stocks plunged and then rallied, making for a dizzying day on Wall Street, while the yen hit a 30-year low before it too rebounded. A key measure of US mortgage rates soared to a 20-year high just shy of 7% — and some are warning they could go much higher. Asian equities are poised for gains.

Photo: Michael Nagle | Bloomberg

Wall Street banks seen flooding markets with bonds post earnings

Banks could be about to deluge the market with more bonds after they post quarterly results, borrowing at a breakneck pace even as other blue-chip companies pull back, and bondholders could suffer in the process. Banks are selling bonds as Federal Reserve rate hikes spur depositors to put their money elsewhere, cutting into a key funding source for the lenders and forcing the firms to find other financing. (Bloomberg Markets | Oct 13)

Fitch warns of gilt turmoil sparking money market fund outflows

Intensifying or persistent gilt market volatility could lead to “sudden large redemptions” of cash from sterling money market funds as liquidity pressure spreads beyond pension funds, according to Fitch Ratings. Money market funds have seen waves of inflows, which analysts attribute to pension funds building up cash buffers following the sharp rise in collateral requirements to cover derivative contracts used by liability-driven investment funds. But Fitch warns these funds could suffer outflows if entities such as corporates that sponsor pension funds or hedge funds facing margin calls withdraw money. (Bloomberg Law | Oct 13)

Federal Reserve officials worried about risks of faster inflation at last meeting

Federal Reserve officials fretted about the level and staying power of inflation at their September meeting, minutes from the gathering showed, and “many” emphasized that the risk of doing too little to control price increases outweighed the risk of doing too much. (The New York Times | Oct 12) see also Core US inflation rises to 40-year high, securing big Fed hike (Bloomberg Economics | Oct 13)

SEC expands communications scrutiny to investment funds

The U.S. Securities and Exchange Commission's scrutiny of how Wall Street handles work-related communications on personal devices and apps such as WhatsApp has expanded beyond broker-dealers to investment funds and advisers, according to four people familiar with the inquiry. Late last month, the SEC and the Commodity Futures Trading Commission (CFTC) fined 16 financial firms, including large banks such as Goldman Sachs Group Inc. and Morgan Stanley, a combined $1.8 billion after staff discussed deals and trades on their personal devices and apps, in a sweeping probe of record-keeping practices. (Reuters | Oct 11)

The most powerful buyers in Treasuries are all bailing at once

From Japanese pensions and life insurers to foreign governments and US commercial banks, where once they were lining up to get their hands on US government debt, most have now stepped away. And then there’s the Federal Reserve, which a few weeks ago upped the pace that it plans to offload Treasuries from its balance sheet to $60 billion a month. (Bloomberg Markets | Oct 10)

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Chinese tech threatens future global security, UK spy chief warns

Beijing’s efforts to exert control over technology both internationally and within China’s borders threaten future global security and freedom, the chief of the UK’s electronic intelligence agency said. Jeremy Fleming, the director of Britain’s Government Communications Headquarters, said Beijing was aiming to use an array of existing and emerging technological means, including digital currency and satellites, to control markets and people, extend surveillance and censorship and export its authoritarian system around the world.

— The Wall Street Journal

Hacktivists force companies to respond to low-level cyberattacks

Increasingly, companies have to deal with nuisance cyberattacks – or bogus declarations of attacks – from hackers seeking attention. U.S. airports continue to put out fires this week after Killnet, a pro-Russia group, set off low-level denial-of-service attacks on their websites that caused temporary outages. False claims of hacks also consume time and energy, necessitating research and a carefully worded response.

— The Wall Street Journal

Quantum experiments seek to protect the future internet

The University of Chicago is studying quantum particles, with an eye to revamping internet and encryption technology to adopt similar behaviors. David Awschalom, professor of molecular engineering,, is leading tests of whether quantum particles can travel intact through miles of fiber-optic networks.

— The Washington Post

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Bored Ape Yacht Club digital artwork from the collection of Ovie Faruq and Mike Anderson. Source: Ovie Faruq

Bored-Ape creator faces SEC probe over unregistered sales

The US Securities and Exchange Commission is investigating Yuga Labs, the creator of the popular Bored Ape Yacht Club collection of NFTs, over whether sales of its digital assets violate federal law. The SEC is examining whether certain nonfungible tokens from the Miami-based company are more akin to stocks and should follow the same disclosure rules.

— Bloomberg | Crypto NFTs

Space exploration: reimagining the workplace

Offices loom large in the executive psyche. They can also be a skyscraping financial commitment, second only to pay. Combine that with the century-old presumption that work is best done in buildings tailor-made for working, and it should come as no surprise that many chief executives and chief financial officers wanted to refill these costly containers as soon as possible.

— Financial Times | opinion

The reporter who knows what Jerome Powell is thinking

When financial reporters enter the headquarters of the Board of Governors of the Federal Reserve System at the intersection of 20th and C Streets in Washington, D.C., they first remove their shoes. As they proceed through a sequence of two metal detectors, they must leave their phones and any other “smart” devices behind. They continue into what’s known as the “lockup,” a secure black box of a room where their special, designated computers – without Wi-Fi or Bluetooth capabilities and which they had previously mailed to an address for inspection – are waiting for them. “The Fed is the most ironclad institution in D.C.; it’s absolutely insane,” says one reporter on the Fed beat. “No other agency requires that — not even the Pentagon.”

— New York Magazine | Intelligencer