Minutes of the Standing Committee on Matters Deferred Until After November 3

Minutes of the Standing Committee on Matters Deferred Until After November 3

Tuesday session. Present: everyone with a position to defend. Absent: anyone with a position to change.

1. The strike. The Committee recorded that on Sunday the President, asked whether the United States would hit Iran that day, said the answer was no and that there would be no strike today. Members admired the precision of the phrasing. A broader pledge made on October 8 covers the period until the vote and says nothing about the morning after. The Pentagon is reportedly drawing up options for after the midterms. The market took the one-day guarantee for a price cut: Brent slipped 1.8% to $114.62 and WTI fell 2.1% to $101.14. Saudi, Pakistani and Turkish officials met in Tehran on Monday and agreed to keep talking. The Committee notes that $115 Brent works as a calendar more than as a price. It is the cost of knowing a date.

2. The Fed. Futures price roughly a 90.6% chance of a hold on Wednesday. September CPI ran at 3.7% with core at 2.6%. The Committee finds no inconsistency between a 3.7% headline and a unanimous wish to do nothing this week. The hike has been relocated, with no plan to cancel it. Members asked where it was relocated to, and the Secretary replied "December," which was minuted without comment.

3. The data. October CPI arrives in mid-November, weeks after the ballots are counted. The Committee therefore recommends that voters be advised to base their decision on whatever the pump says. Members also noted that the price of Treasuries was not deferred. Monday's $69 billion two-year auction cleared at 4.708% and tailed by 0.3 basis points, with indirect bidders taking 45.68% against an average of 58.3%, and dealers left holding 13%. Foreign buyers, it seems, also asked to attend a later session. The ten-year closed at about 4.99% and the two-year near 4.72%.

4. Supply of paper. The Rapporteur drew attention to the delivery schedule of Meta's financing. The $22.5 billion of Class A forward sales and the $60 billion at-the-market program in non-voting Class C stock are timed for later, with the latter starting in the first quarter of 2027. Meta expects no initial proceeds from the forwards and gets its cash when it delivers the shares. The Committee admires a company that raises $95 billion in a way that leaves nothing to spend this week. The much larger Anthropic offering is targeted for the week of November 16. The Committee takes no view and merely records the date.

5. France. Paris reported that its hard decisions are scheduled for the Assembly's full-budget vote on November 17 and S&P's review on November 27. The Committee notes that Moody's, on Friday, found the situation not yet worth a downgrade, which in this Committee's experience is how the last forty-eight hours before a downgrade usually feel.

6. Positioning. BofA's Flow Show remains tactically risk-off until mid-November and expects the 30-year yield to head toward 5% and the dollar index to dip below 100. Members observed that this is the same calendar again, wearing a strategist's jacket. Gold fell 3.98% last week and hovers near $4,017, while Bitcoin trades around $80,200. Both were described as waiting. Neither could say for what.

7. Any other business. The semiconductor index rose 2.82% on Monday, and Seoul added 3.4% before a sidecar halted program trading. The Committee welcomes the rebound and wishes to record that a sidecar is a mechanism for slowing a market down for five minutes so that it can resume the same conversation.

A member asked whether the market is pricing the risks or merely pricing their dates. The Chair ruled the question out of order on the grounds that it had no answer before November 4.

For the record, the following items are due between November 3 and November 27: the Iran options, October CPI, Anthropic's listing, a full French budget vote, a rating review on France, and a Fed meeting at which the hike that has been postponed will be asked to show its papers. The Committee observes that deferred problems keep their size and acquire an appointment, and that an appointment concentrates the mind more than it shrinks the problem. Nothing on today's tape is cheap enough to pay for that.

Meeting adjourned. Next session: November 4. Agenda: everything.