Bitunix Analyst: Bond Tightening and Election Pressure Interweave — the Fed’s Hike Faces Growth Risk

October 27 — US policy is facing multiple pressures from inflation, economic growth, and election strains. Reuters/Ipsos polling shows Trump's approval rating rebounding to 32%, but Democrats still lead by 11 percentage points in the generic congressional ballot, with 73% of respondents believing the cost of living is heading in the wrong direction. Trump has proposed a $1 million reward for reporting election fraud, yet the funding source and enforcement method remain unclear; the campaign is no longer just about contesting congressional seats but also revolves around livelihood costs, government trust, and policy commitments.

Trade policy is likewise affecting the election and corporate costs. The US and Canada are negotiating to lower steel and auto tariffs; the US currently imposes tariffs of up to 50% and 25% on Canadian steel and autos, respectively. Even if progress is made before the vote, it may cover only some goods, and Washington is still demanding further concessions from Canada. If tariffs persist, manufacturing costs will rise; if partially eased, some supply chain pressure could be alleviated, but that would not necessarily mean bilateral trade disputes are fully resolved.

The monetary policy debate is centered on whether another rate hike is necessary. Moody's chief economist Zandi argues the Fed should hold steady this week, citing the 10-year Treasury yield fluctuating around 5% and mortgage rates still above 7%, meaning financial conditions have already tightened. War-driven energy costs may indeed prolong inflation pressure, but rate hikes cannot increase oil supply and may instead further squeeze household purchasing power and corporate financing space.

Market focus is therefore not just on whether the Fed raises rates, but on whether the energy supply shock will combine with high rates to create a double drag. If oil prices keep rising, inflation may prove sticky; if bond market tightening begins to suppress demand, growth risks will rise again. Next, watch how the Fed weighs these two forces and whether US-Canada tariff talks can reduce corporate costs, because policy trade-offs will directly affect the dollar, Treasury yields, and risk asset pricing.