In the past few weeks, Federal Reserve officials have issued a series of comments, believing that the rise in US bond yields has tightened the financial environment, so there is no need to raise interest rates. But Megan Graper, the global co head of debt capital markets at Barclays Bank, disagrees.

On Tuesday, she said in a television interview that the market is engaged in a "tug of war" with policy makers every day around the future path of interest rate hikes. I think there have been many misinterpreted signals this month, "she said. I think the real question in my mind is what message Powell and other members of the Federal Reserve are conveying in the context of continued rapid evolution before the start of this week's silent period

Federal Reserve Chairman Powell will deliver a speech at the New York Economic Club on Thursday, just before the Fed enters a period of silence.

I think we have interpreted too much of the recent comments from the Federal Reserve, which suggest that interest rate hikes may have already completed some of the important tasks, "said Graper. The so-called "Fed comments" injected optimism into the market that interest rate hikes would be suspended. This is because high bond yields have raised borrowing costs in various economic sectors, from mortgages to corporate debt. I think what the market did not consider was the subtle difference between 'why'. Why did financial conditions tighten? If economic strength is driving these long-term interest rates, then the Federal Reserve may actually need to do more, "said Graper.

After September data showed stubborn inflation and rapid employment growth, the strong consumer demand reflected in the retail sales data released on Tuesday indicates that consumers are still contributing to the economy and seem not deterred by high prices. The strong labor market has provided impetus for consumption and shattered economists' expectations that household savings will decrease due to the pandemic, leading to a slowdown in consumption. These may prompt the Federal Reserve to raise interest rates again. Traders have increased their bets on rate hikes in the coming months and pushed the first rate cut until late 2024.

Omar Sharif, President of Inflation Insights LLC, said in a statement: "The 'death' of American consumers has been greatly exaggerated. This is a comprehensive and good report that shows the continued strength of consumer spending." Control group sales (excluding food services, car dealerships, building materials stores, and gas stations) increased by 6.4% annually in the three months to September. This is the largest increase since June 2022.

The Atlanta Federal Reserve's GDP Now forecast shows that the economy grew at an annual rate of 5.4% in the third quarter, which will be the strongest growth since the end of 2021. Personal consumption may increase by 4.1%, the fastest since the second quarter of the same year. Priscilla Thiagamorthy, senior economist at MO Capital Markets, said in a report: "Strong US consumers continue to drive demand, despite some unfavorable factors (including the UAW strike), factories are still moving forward.

Strong demand helps support American manufacturers. The Federal Reserve's US industrial production index, driven by strong mining and manufacturing industries, rose to its highest level in nearly five years in September. The rebound in production of consumer goods and construction supplies drove factory output last month. Thiagamoorthy said:

Although this may not be enough to make the Federal Reserve give up watching in November, the resilience of the US economy means that the Federal Reserve's work on cooling the economy and restoring price stability may not be completed yet

Morgan Stanley economists, supported by Tuesday's data, raised their third quarter GDP growth forecast to 4.9%. JPMorgan Chase's current forecast is 4.3%, while Goldman Sachs has raised its forecast to 4%.

As long as companies continue to produce and recruit, and consumers continue to consume, there will be a virtuous cycle, "said Kayla Bruun, senior economist at Morning Consult LLC. Under the various unfavorable factors brought about by inflation and interest rates, you may think that this cycle will be broken, but it seems to be working

Bloomberg economist Elizabeth Winger believes that robust September retail sales exaggerate consumers' resilience. Although consumer spending in the third quarter was indeed very strong, it was due to a temporary outbreak of activity and was not sustainable. Retail data mainly reflects commodity expenditures, thus limiting the significance of this report. The actual expenditures for goods and services in September will be announced later this month.

Another data released on Tuesday showed that the confidence index of residential builders fell to its lowest level in nine months in October. For most of the past year, market sentiment and sales have been under pressure due to rising mortgage rates and high housing prices.