The Banks Go First. CPI Decides.

Last Monday I asked whether earnings could take over as the market’s driver while the 10-year stayed above 5.2%. The answer was a qualified yes. The S&P 500 set its first record since August on Tuesday and finished the week up 1.2% at 7,811.54, a fraction below that high. But the first reports of the season showed where the pressure is. PepsiCo beat forecasts and still cut its profit outlook. Delta missed and slashed its full-year guidance on about $6 billion of extra fuel costs. And Thursday’s report that OpenAI’s revenue run-rate is about $20 billion below what had circulated reminded everyone how much of this market rests on one theme.

The Fed didn’t help. Wednesday’s minutes showed most officials expect another hike by year-end, and the 10-year touched 5.36%, its highest since 2002, before easing to about 5.24% by Friday. Futures now price a pause in October and a hike before the year is out. That leaves this week with a clear structure: the banks tell us how the economy looks from the inside, and CPI tells us how the Fed will see it. The bond market is closed today for Columbus Day; stocks are open.

1. Tuesday and Wednesday: the banks set the tone

JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo open the season on Tuesday; Bank of America and Morgan Stanley follow on Wednesday, along with BlackRock. They come in off a bad month. The S&P 500’s bank index fell about 7.5% over the past four weeks in a selloff driven largely by rising yields. Consensus looks for roughly $5.90 a share from JPMorgan, about $13 from Goldman, around $2.65 from Citi, $1.85 from Wells Fargo and $1.10 from Bank of America.

Three things matter more than the headline numbers. First, capital markets: with a $22.6 billion PTC buyout, the Paramount–Warner Bros. Discovery deal closed and volatile rates, trading and advisory revenue should be strong, and Goldman and Morgan Stanley are the cleanest read. Second, net interest income: higher short-term rates help lending margins, but only if deposit costs don’t rise faster. Third, and most important for the macro picture, consumer credit. Real wages are falling, gasoline and diesel are expensive, and Michigan sentiment just dropped to 46.3. Any rise in card charge-offs or reserve builds would tell us the squeeze is turning into stress.

2. Wednesday: CPI, and the core that matters

September’s consumer price index lands at 8:30 a.m. Wednesday. Forecasters expect headline prices to rise 0.6% on the month, lifting the annual rate to about 3.6%–3.7% from 3.4%, almost entirely because of gasoline. Core inflation, excluding food and energy, is expected to rise 0.2% on the month and about 2.5% from a year earlier. The headline is priced. The core is the market mover.

Here is why. The minutes made clear that officials are worried less about any single month than about inflation expectations becoming unanchored, and Friday’s survey showed long-run expectations rising to 3.5%. A 0.2% core print would suggest the energy shock is staying in energy, and would keep October a likely hold. A 0.3% or higher, particularly if services and shelter are firm, would suggest it is spreading — and the odds of an October hike, now around 20% to 25%, could jump quickly. Watch the 10-year’s reaction more than fed funds futures: last Wednesday’s 5.36% is the line that matters for equity valuations.

3. Thursday and Friday: spending, chips and the chair

Retail sales on Thursday are expected to rise about 0.3%–0.4% after a gain of more than 1% in August, and some of that will be higher prices at the pump. The control group, which strips out gas, autos and building materials, is the better read on whether consumers are cutting back. Producer prices the same morning show whether pipeline pressure is still building. Then TSMC, which last week reported a 51% jump in quarterly revenue, gives its fourth-quarter outlook and spending plans — the most direct answer the market will get this week to the question Thursday’s OpenAI report raised about AI demand.

On Friday, Fed Chair Kevin Warsh speaks at the IMF and World Bank annual meetings in Bangkok, a day before the Fed’s pre-meeting quiet period begins. After a CPI print and a week of bank commentary, his remarks will be the last guidance markets get before the Oct. 27–28 meeting. Expect him to keep his options open. That alone may be enough to keep the year-end hike priced.

4. Oil and the weekend

Energy goes into the week with three live risks. Hurricane Isaias made landfall near Destin, Florida, on Friday night as a Category 2 storm after producers shut in roughly 70% of Gulf of Mexico oil output; how quickly platforms restart will drive U.S. crude this week. In the Gulf region, a Houthi attack on Riyadh’s main airport killed at least 12 people on Saturday, and President Trump said he is weighing whether to join the fight against the group. And on Sunday, Iran called the U.S. reply to its proposal for reopening the Strait of Hormuz “insufficient.” Brent settled at $104.72 on Friday, nearly $13 above U.S. crude. A Gulf restart can narrow that spread. Only a deal on Hormuz can bring Brent down for good.

The setup in one line

The S&P is within reach of its record, the Fed is on hold for now but leaning toward one more hike, and the 10-year sits between the 5.17% it touched after the Oct. 2 jobs report and last Wednesday’s 5.36% high. The bullish path is clean bank results with no consumer-credit surprises, a 0.2% core CPI and a TSMC outlook that reassures on AI demand. The bearish path is a hot core print that revives October hike bets just as the AI trade is looking for reassurance. Watch core CPI, consumer credit commentary from the banks, and whether small caps — down 0.9% last week — can finally join in.