Fed Tightening, Persistent Inflation, Credit and Fiscal Pressure

Q2 GDP was revised to 2.2% with reported underlying growth of 4.6%, while August core PCE remained 3.0% and headline PCE 3.4%. The September FOMC raised rates to 3.75%-4.00%, mortgage rates moved above 7.3%, and long-term Treasury yields exceeded 5.3%. AI investment may be adding near-term cost pressure, while fiscal borrowing, political pressure on Powell, and questions about Fed independence keep the higher-for-longer outlook unsettled.