Rather than the strength or weakness of economic indicators, the focus is on Chairman Powell's decision.

US employment statistics (September) were solid, but within the range of the Federal Reserve's expectations and not numbers that could change monetary policy. As student loan repayments resume and excess deposits are depleted, the market is starting to feel the impact of quantitative tightening (QT), and there are also views that US stocks will not rise in the future.

Despite the current situation with inflation and wages peaking, the labor market remains strong, and the difference in monetary policy lies in whether to deal with it through (1) interest rate hikes (Volcker's approach) or (2) stopping interest rate hikes and dealing with it at current levels for an extended period (Powell's approach). Chairman Powell has already chosen the latter, which involves dealing with it over a long period of time, but the market is concerned that strong economic indicators could lead to a change in interest rate policy. That is why long-term bonds are being sold.

The press conference after the FOMC meeting in July, where Chairman Powell left room for further rate hikes depending on future data, is considered a mistake. The IMF annual meeting will be held in Morocco from this week (October 9th to 15th). Over the past two years, there have been clear changes in US monetary policy during discussions between Japan, the US, and Europe. Subsequent FOMC meetings have confirmed changes in monetary policy.

It is fully conceivable that a similar situation will unfold this year. What Chairman Powell should do is clearly dispel market concerns about the possibility of further rate hikes. What we should focus on in the future is not the strength or weakness of economic indicators, but the outcome of Chairman Powell's decision at the November 1st FOMC meeting. If the final rate hike decision becomes clear, long-term interest rate rises will halt; otherwise, they will continue.