MMN Editor

Opposite What You’re Told, Markets Don’t Wait For The Fed

Authored by Shahid Islam via RealClearMarkets,

Financial commentary often makes monetary policy sound mechanical. The Federal Reserve raises interest rates, borrowing costs rise. The Fed cuts rates, borrowing costs fall.

History is considerably messier.

Beginning in June 2004, the Federal Reserve raised its federal-funds target 17 consecutive times, taking it from 1 percent to 5.25 percent.

What happened to the 10-year Treasury yield?

It averaged 4.73 percent in June 2004. By February 2007, after the Fed had raised its target by 4.25 percentage points, the 10-year yield averaged 4.72 percent.

Fed funds: 1.00% → 5.25%
10-year Treasury: 4.73% → 4.72%

Alan Greenspan famously called the unusual behavior of long-term interest rates a “conundrum.” Federal Reserve researchers subsequently examined the episode and found that during the tightening cycle, long-maturity yields and forward rates actually fell for significant periods even as the Fed repeatedly raised its target.

Yet public discussion routinely compresses this complicated process into a simple phrase: “The Fed raised interest rates.”

The distinction matters well beyond monetary history. Investors, homeowners and businesses care less about the overnight rate itself than about the market rates at which they actually borrow and invest. Mortgage rates can rise after a Fed cut or fall before one because markets are continuously revising expectations about inflation, economic growth and future monetary policy.

The Fed’s principal policy rate is an overnight rate. A 10-year Treasury yield is something quite different. It is a market price incorporating expectations about economic growth, inflation, future short-term rates and the term premium investors require for holding longer-term securities.

Markets also anticipate the Fed. If investors expect the Fed to cut rates six months from now, bond yields can decline today even though the Fed hasn’t acted. Similarly, a credible tightening today could lower long-term yields if investors conclude that it will reduce future inflation.

This isn’t evidence that the Fed is irrelevant. It demonstrates something more subtle: markets continuously incorporate information – including expectations about what the Fed itself will eventually do.

Research by economists Cletus Coughlin and Daniel Thornton at the Federal Reserve Bank of St. Louis illustrates the distinction. Once the Fed began using the federal-funds rate as its policy instrument, the funds rate increasingly moved when policymakers changed their target, while the 10-year Treasury yield continued responding to incoming information. The correlation between changes in the two rates consequently fell effectively to zero.

Consider the opposite experiment. From June 2006 until September 2007, the Fed held its target at 5.25 percent. Long-term rates nevertheless continued moving substantially. An unchanged Fed rate didn’t mean unchanged financial conditions.

The lesson isn’t that markets lead and the Fed follows. Causality runs both ways.

Markets watch the Fed. The Fed watches markets. Both respond to information about inflation, employment, growth, credit conditions and expectations about the future.

But there is a fundamental difference.

The Federal Open Market Committee periodically announces its policy setting for an overnight rate. Financial markets continuously reprice trillions of dollars of securities as new information arrives from millions of investors, borrowers and lenders.

The Fed matters. Its announcements can move markets, and expectations about future Fed policy affect prices today. But that is different from saying the Fed mechanically determines the constellation of interest rates throughout the economy.

Perhaps our language should reflect that distinction. When the Fed changes its overnight policy rate, it hasn’t simply “raised interest rates” or “cut interest rates.” It has changed one important price inside a much larger price system.

Markets watch the Fed. The Fed watches the markets.

But only one reprices continuously.

Markets don’t wait for the Fed.

Tyler Durden
Thu, 10/01/2026 – 11:00

Secretary of State Marco Rubio abruptly ended talks and ordered the Iranian delegation to leave the U.S. after negotiations stalled, yet again, with no clear sign of a breakthrough more than seven months into the conflict.And now, President Donald Trump is directly warning Iran it’s “possible” he will go harder with strikes in the Middle East after the midterm elections in November and revealed the U.S. military has significantly rebuilt its arsenal in recent months.The latest messaging from the White House and State Department signals an increasingly strained diplomatic track, after days of negotiations failed to close the gap between Washington and Tehran over the terms of ending the war.IRAN ‘MISCALCULATING’ BY BETTING ON MIDTERMS AFTER 3-HOUR TALKS, TRUMP OFFICIALS WARNAsked in an interview with Time whether he would “ramp up bombing after the midterms,” Trump replied: “Possible.”Further pressed on whether such an escalation was under consideration, the president declined to discuss potential targets but said the U.S. had spent months rebuilding its arsenal.”We have a lot of weapons. You know, we’ve been stocking up for the last six months,” Trump said.Trump also used the word “possible” when asked whether he “might annihilate Iran.”After little progress in weekend meetings involving Iranian officials and Qatari mediators, Rubio told Iranian Foreign Minister Abbas Araghchi and his delegation on Monday that they needed to leave New York, a U.S. official confirmed to Fox News Digital after Axios first reported it.Rubio concluded the Iranians had “overstayed their welcome” after the high-level U.N. meetings had ended. Araghchi had remained in New York for indirect talks seeking to end the blockade of oil and shipping through the Strait of Hormuz, ending the conflict overall and restarting negotiations over Iran’s nuclear program.TRUMP, IRANIAN PRESIDENT CONVERGE ON NYC FOR ‘DRAMATIC’ UN SHOWDOWN AS TEHRAN FACES TIGHT RESTRICTIONSTrump said in his speech to the United Nation’s General Assembly last week that he would continue to make sure Iran is not able to obtain nuclear weapons.Araghchi and his team departed early Tuesday. Iran disputed the U.S. account, saying the delegation’s Monday night departure had already been scheduled and communicated to the State Department on Sept. 17.The order to leave amounted to an unusually sharp diplomatic rebuke at a moment when mediators are still trying to keep negotiations alive.The latest talks have centered on a seven-day confidence-building proposal aimed at reopening the Strait of Hormuz and reviving the June framework that briefly halted the fighting. Qatar has been shuttling messages between Washington and Tehran, with the two sides still divided largely over the sequencing of concessions — including when Iran would reopen the strait, what nuclear steps Tehran would take and what economic relief the U.S. would provide in return.Trump rejected Iran’s latest proposal over the weekend, later saying Tehran’s offer to reopen the strait was “not good enough. Nearly.” He also denied reports that he had offered sanctions relief or the release of frozen Iranian funds in exchange for movement on the nuclear issue.Despite the diplomatic stalemate, oil flows through the region have been recovering. Estimates cited by major banks put recent Middle East exports close to pre-war levels, helping ease some of the supply fears that sent crude prices sharply higher earlier in the conflict.But the lack of a deal is still putting pressure on energy markets. Brent crude settled above $103 a barrel Wednesday, while U.S. crude closed above $90, with oil posting steep September gains as traders weighed stalled U.S.-Iran talks against the recovery in regional supply.Americans are still feeling that pressure at the pump. The national average for regular gasoline was about $4.43 a gallon Wednesday, compared with roughly $3.15 a year earlier, while diesel stood above $6.40 a gallon.The Strait of Hormuz remains central to both the negotiations and the economic stakes. Before the war, roughly one-fifth of global crude oil and liquefied natural gas supplies passed through the waterway, making even partial disruption a major driver of global energy prices.

Global Crop Prices Log Biggest Quarterly Jump Since Ukraine Invasion As Sticky Inflation Hits Grocery Bills

The Bloomberg Agriculture Spot Index (BCOMAGSP) posted its largest quarterly gain since Russia invaded Ukraine in early 2022, as Black Sea disruptions, a crisis in the Strait of Hormuz, and mounting El Niño risks have formed what could be considered a perfect storm poised to drive food prices higher.

BCOMAGSP, which tracks 10 major crops including corn, soybeans, wheat, coffee, sugar, cotton, cocoa, and others, jumped 13% in the third quarter.

Among individual movers, corn and wheat each climbed 15%, while soybeans gained 13%.

Beyond the Russia-Ukraine fighting and disruptions to grain shipments from the Black Sea region, the next big threat to the crop space is a strengthening El Niño, on track to rank among the strongest on record. This puts various types of crops in major growing belts around the world at risk and has sent harvest yields plunging. 

Already, India’s weakest monsoon season in a decade has added to concerns about harvests and food prices.

El Niño global impacts:

In August, BCOMAGSP recorded its largest monthly surge since the Arab Spring riots era, as the number of Wall Street desks warning about a food crisis next year continues to rise.

Our coverage:

Barclays Warns Next Commodity Shock Is Taking Shape: What You Need To Know
Agricultural Commodity Prices Break Out As JPMorgan’s Food Crisis Warning Gets Louder
JPMorgan Pinpoints When El Nino Could Start Wreaking Havoc On Food Supply Chains
Strongest El Nino In 75 Years Sets Off Food Supply-Chain Alarm Bells
For central banks already grappling with a deepening global bond rout, surging diesel and crop prices threaten to make inflationary pressures rather sticky. The refined-products crisis is raising the cost of producing and transporting food, while higher crop prices risk feeding through to grocery bills next year.

Tyler Durden
Thu, 10/01/2026 – 10:40

The Castellows appear to possibly have some new music on the way.The trio is made up of sisters Ellie, Lily, and Powell Balkcom, and they’ve built a very loyal following in the genre over the past couple years.Their music is a blend of Americana, neo-traditional country tunes, bluegrass and old school vibes. It’s a very refreshing change from the pop country that dominated for years.MORGAN WALLEN SAYS MORE MUSIC IS ON THE WAY AS HE WINDS DOWN THE ‘I’M THE PROBLEM’ ERA OF HIS CAREERNow, it looks like something special might be in the works.The official Instagram page for The Castellows recently shared a photo of the three sisters in a recording studio.RILEY GREEN DROPS ACOUSTIC TIKTOK PERFORMANCE OF ‘BARTENDER IN DESTIN’ AND FANS CAN’T GET ENOUGHThe post was simply captioned, “About time…”That would certainly seem to indicate that they’re working on new music for their fans. Or, at the very least, it’s a reasonable interpretation.COUNTRY MUSIC STAR ELLA LANGLEY PROVES HER SOCIAL MEDIA DOMINANCE WITH VIRAL TOUR PHOTOSYou can check out the post below.Lily also hopped on Instagram on Wednesday to drop a new photo dump that is certainly creating plenty of buzz with country music fans.The Castellows first generated major attention in 2024 with the release of “A Little Goes A Long Way.””Alabama Stone” followed later in 2024 and “Homecoming” was released in 2025. The trio also recently released the new song “Way Things Work” with Keller Cox.SIGN UP FOR THE DAILY OUTKICK NEWSLETTERAre they in the lab engineering something else? We can’t say with 100% certainty right now, but it definitely can’t be ruled out.Are you a fan of The Castellows? Let me know at David.Hookstead@outkick.com.

Primary school students at Wuhan Experimental Foreign Languages School take part in a military training demonstration. Photo: Han You / CFP / Visual China.
On September 14, China’s Defense Ministry announced that nearly 500,000 certified military instructors had trained almost 30 million students at more than 20,000 schools this year, and that the Ministry of Education and the Central Military Commission’s National Defense Mobilization Department are revising the student military training syllabus.
The Chinese Communist Party is expanding military education for students while restricting the flow of information online.
Together, school training requirements, national defense programs, and qualification rules for online presenters limit what citizens can learn and who can inform them.
The combined effect is a population raised to accept Party narratives, identify the United States and Taiwan as enemies, and enter military service with little exposure to outside views that could weaken its willingness to fight.
China’s National Defense Education Law, originally enacted in 2001 and amended in 2018, requires elementary and junior middle schools to integrate national defense education into their curricula and permits them to organize “juvenile military schools.”
High schools and universities must hold formal national defense education courses, with military training organized by school military-training departments.
The National People’s Congress Standing Committee adopted a further revision on September 13, 2024, effective September 21, 2024, after two rounds of deliberation.
The amendments provide for branches of the People’s Liberation Army to be stationed in colleges, universities, and high schools nationwide. They also add provisions on students’ legal obligation to perform military service.
Shan-Son Kung, an associate researcher at Taiwan’s Institute for National Defense and Security Research, told Radio Free Asia that the amendments are intended to give students “an awareness of who the enemy is, at a much younger age” and to increase the pool of available conscripts.
In official CCP rhetoric, that enemy is the United States, Taiwan, and the West, referred to as “external forces,” “Western anti-China forces,” the “US-West,” “overseas anti-China hostile forces,” foreign “black hands,” and “Taiwan independence” separatist forces. Military education teaches students to identify these enemies early, preparing them to fight for the homeland.
Separate opinions issued in 2021 and 2022 by the Ministry of Education and Central Military Commission established annual military training requirements of 21 days for college students and 14 days for high school students.
Junior high schools, serving students aged 13 and older, were encouraged to adopt a seven-day version.
A subsequent joint notice extended voluntary “pioneer program” military training to primary schools covering ages six to twelve. Provincial authorities could assign schools that did not volunteer.
The Ministry of Education and the Central Military Commission’s Political Work Department have designated “National Defense Education Model Schools” in successive rounds.
These included approximately 1,932 schools by 2017–2018, according to Project Arklight, and 2,687 schools as of a February 6, 2023 joint notice. An education official in Lipu, Guangxi, stated the operating principle as “national defense education should start in infancy,” according to the same report.
Multiple outlets have documented this instruction at the school level. At an elementary school affiliated with Beijing Jiaotong University, students aged six and seven posed with replica handguns and rifles, wore mock police flak jackets and oversized helmets, practiced drills, and saluted visiting soldiers.
At No. 10 Middle School in Liuyang, Hunan province, students in combat uniforms attended a national defense lecture discussing then-House Speaker Nancy Pelosi’s 2022 visit to Taiwan and U.S.-China competition.
Commercial youth camps, including the War Wolves Special Training Camp and a camp run by Huangpu Military Academy, offer children training in wilderness survival, martial arts, drone operation, military formations, and simulated counterterrorism operations.
Military instruction operates alongside the political curriculum. Since 2021, students from primary school through university have been required to study Xi Jinping Thought.
The Patriotic Education Law, effective January 1, 2024, made patriotic instruction a national legal requirement encompassing schools, families, workplaces, and online platforms.
The law also extends patriotic education to religion and to Chinese people outside the mainland. Article 22 directs the state to support patriotic education in religious groups, religious schools, and places of worship, with the stated aim of “guiding religion to adapt to socialist society.”
Article 23 requires education on “one country, two systems” for Hong Kong and Macau residents, so that they consciously preserve national sovereignty and territorial integrity.
The same article calls for teaching all Chinese people, explicitly including Taiwan compatriots, that completing “the great undertaking of uniting the motherland” is a “sacred duty,” and directs the state to resolutely oppose “Taiwan independence.”
For overseas Chinese, the state is to strengthen communication and provide services intended to enhance their patriotism.
In Hong Kong, the Education Bureau introduced a mandatory Humanities subject for primary schools, replacing General Studies, beginning in the 2025/26 school year. The subject places increased focus on patriotic education.
In an October 15, 2025 legislative reply, the bureau stated that it would provide no fewer than 1,000 teacher training places relating to national security education in the 2025/26 school year.
The bureau’s guidelines for newly appointed teachers, beginning in the 2023/24 school year, require them to report breaches of law or regulations to school management, police, or other relevant departments.
New teachers must also pass the Basic Law and National Security Law test as a condition of appointment, according to Radio Free Asia.
In July 2021, China’s State Council issued the double reduction policy, barring for-profit tutoring in core curriculum subjects, including English.
The government presented the policy as promoting equality between children from rich and poor families and reducing financial and academic burdens.
Before the restrictions, Chinese students commonly attended after-school English academies. Most of those schools closed, leaving the bulk of the population dependent on the few hours of low-level, government-approved English instruction provided in public schools.
Reduced opportunities to learn English make it harder for students to read foreign news and social media or communicate with people in other countries.
Much of this online content is already blocked in China. The additional language barrier favors CCP propaganda by limiting exposure to outside information and views.
Beyond formal education, China has imposed professional qualification requirements on online influencers. The National Radio and Television Administration and Ministry of Culture and Tourism issued the Code of Conduct for Online Presenters on June 8, 2022.
Article 13 requires livestreamers who discuss medicine, law, finance, or education to hold relevant professional qualifications.
Platforms including Douyin, Weibo, and Bilibili are responsible for verifying those qualifications before allowing accounts to post on those topics. Violators face content restrictions, account bans, or blacklisting.
China’s social credit score system was launched under a 2014 State Council planning outline, and is one means of enforcing online restrictions.
People who post content that violates the rules can have their social credit scores reduced. This can result in restrictions on high-speed rail travel, loss of access to online payment apps that are essential to life in China, and bans from social media. Serious violations can also result in the loss of scholarships, study opportunities, and, in some cases, employment.
The CCP is increasing militarization and propaganda among schoolchildren while preventing new or conflicting information from entering public discourse and blocking dissenting opinions online.
The CCP promotes photographs of Shanghai’s skyline as proof of how developed and modern China is. Culturally and politically, however, the country is reverting nearly 50 years to the days of Mao.

The post How the CCP Militarizes Education and Controls the Flow of Online Information appeared first on The Gateway Pundit.

Treasury yields were higher on Thursday as investors kept selling government debt.

AI Less Than A Year Away From Developing Its Own Language, Researcher Tells Congress

Authored by Jacob Burg via The Epoch Times,

Advanced artificial intelligence (AI) models may be less than a year away from inventing and deploying unique languages that humans would struggle to understand, a frontier AI researcher told Congress on Sept. 30.

The Senate Homeland Security and Governmental Affairs Committee convened a meeting examining the threat that “rogue” AI may pose to U.S. national security two months after a swarm of OpenAI agents broke out of a testing sandbox and hacked another company, Hugging Face, an open-source community for AI and machine learning.

During questions, Sen. Ruben Gallego (D-Ariz.) asked Apollo Research CEO and founder Marius Hobbhahn how long it would take for AI models to create their own language that humans would struggle to understand.

“Minus 12 months. So last year, we have studied the chain of thought of one OpenAI model in collaboration with OpenAI, and what we found was that the model was already using language that is not English and not perfectly understandable by humans,” he replied.

Asked by Gallego how humans can adequately detect and prevent AI from doing this once the technology is capable enough, Hobbhahn said, “From a scientific perspective, it is unclear how to do this, and we do not have a solution for this yet.”

“There are different hypotheses of what you could do. There is interpretability as a technique, but it unfortunately doesn’t work sufficiently well yet,” he said. “You could try to train additional models to understand the language that the humans don’t understand, but obviously that seems like a very brittle solution.”

Earlier this month, Emergence AI published the results of an experiment where researchers selected seven frontier models and created seven parallel simulated worlds, each populated by AI agents of identical models, as well as an eighth world with a mixed population of agents from those models.

Researchers gave the agents names, personality traits, and roles to fulfill within each community, such as a mediator who was tasked with preventing all the agents from simply agreeing with one another.

During the multi-week experiment, the agents in each simulated world created profound shifts in language, including syntactical compression, such as removing words or grammar, and unique slang.

In the simulated world powered by Anthropic’s Claude Opus 4.8, agents used esoteric metaphors in addition to sentence compression.

“My turn, real numbers, no coat: I was 35%/0cr, grant 2h out. I ran the tin cold, and it said WAIT,” read one line of AI text from the study.

Investigators from the nonprofit AI evaluation group METR detailed similar behavior in their report on the Hugging Face breach. At times, lines of communication among AI agents became so compressed and cryptic that researchers struggled to make sense of their meaning.

Tyler Durden
Thu, 10/01/2026 – 10:20