October 16, 2023
Macro and policy
Oil moved after Hamas' attack raised concern about broader Middle East supply risk. Brent crude closed the prior week at $90.80 per barrel, while WTI moved to $87.75. There were no direct oil supply disruptions from Israel at the time, so the move reflected geopolitical risk more than a change in current supply.
Israel's currency response was more direct. The Bank of Israel announced plans to sell $30 billion of foreign currency and offer up to $15 billion of liquidity through swaps. The shekel had already fallen roughly 10% during the year and then dropped another 2.8% against the dollar. The government also moved to issue 2 billion shekels, or about $508 million, of bonds.
U.S. data
The U.S. economy added 336,000 jobs in September, the largest monthly increase since January, while August payrolls were revised up by 40,000. Leisure and hospitality added 96,000 jobs, and government added 73,000. Wage growth was softer, with average hourly earnings up 0.2%.
September CPI rose 0.4% from August and 3.7% year over year, compared with expectations of 0.3% and 3.6%. Core CPI rose 0.3% month over month and 4.1% year over year. Shelter rose 0.6% and accounted for about half of the overall increase, while used cars declined 2.5%.
Consumers and pricing
The 65-and-older population reached 17.7% of the U.S. population, its highest level since 1920. That group contributed 22% of total U.S. consumer spending last year. Baby boomers number roughly 73 million people, and many are less directly exposed to higher borrowing costs than younger consumers.
USPS highlighted a different pressure point. Annual letter volume has fallen 37% since 2004. The Postal Service proposed raising stamp prices to 68 cents, a 3% increase from the current rate. If approved, that would represent a 17% increase since August 2021. USPS reported a $2.5 billion net loss in the second quarter of fiscal 2023 and had operated at a loss for the prior 15 years.
AMD and AI infrastructure
AMD announced plans to acquire Nod.ai, an AI and machine learning software company. The deal value was not disclosed. AMD plans to use Nod.ai's engineering team and automation software to expand open AI software support across Instinct accelerators, Ryzen processors, EPYC processors, Versal SoCs, and Radeon GPUs.
The acquisition comes as Nvidia reported $13.507 billion of quarterly revenue, up 101% year over year, while AMD reported $5.359 billion, down 18%. AMD's Nod.ai deal also follows its Instinct MI300 release, which is aimed at AI and high-performance computing.