Daily Brief Macro: Fed: Higher Neutral and more

• The Fed hiked by 25bp to 3.75–4.00%, with the dots signalling at least one more increase this year and a long plateau for rates at that higher level.
• Its median rate path is now at 4.1% for 2026–27 and 3.9% for 2028, in a hawkish shift relative to June’s dots and the consensus held until recently.
• A rise in the longer‑run rate to around 3.25% implies a structurally higher neutral 𝑟∗ that pressures peers to reciprocate. We believe the truth is likely even higher than this.

• The BoE’s reiterated 6-3 vote for no change was an unsurprising ongoing failure to rise to the challenge, unlike its peers. But at least members are on course for November. 
• Reliance on a low neutral rate and expectations being anchored at 2%, despite all evidence to the contrary, are critical biases pushing the BoE’s policy failure to persist.
• QT’s expensive mistake is belatedly softened by selling gilts to the DMO, but, like a November hike, this is too little, too late. The fiscal cost could have been avoided.

• In the past several days, Korea’s National Assembly passed an amendment to the Capital Markets Act, codifying a bipartisan compromise known as the “50%+1” rule for tender offers.
• I do not like the new 50%+1 tender offer system in Korea, although it is slightly better than the existing tender offer system in Korea.
• What about the remaining 49.99% of the minority shareholders? Clearly, these remaining minority shareholders are not treated fairly. 

• Brazil’s Copom cut the Selic 25bp to 13.75%, in line with consensus. This keeps a restrictive stance as de-anchored expectations and upside inflation risks persist.
• Above‑target IPCA expectations mean future easing depends on services disinflation developing further and a steadier fiscal‑policy backdrop.
• Global shocks and domestic demand risks keep the rate path data‑driven, with scope for pauses and only cautious further cuts from this lower level.

• Hong Kong’s IPO + placement pipeline has created an estimated HK$1.2trn of net absorbable supply, equivalent to ~5% of free float.
• Thin floats, six-month lock-ups and rising rates are weakening IPO absorption, while A/H discounts point to venue-specific liquidity stress.
• Positioning: favour A-shares, HK cash-returners and HKD cash; underweight the 2026 IPO cohort until supply exhaustion becomes visible.

• India’s 2026 net equity supply is about ₹7.7 lakh crore, 3.7% of free float. The IPO is the smallest line; foreign selling and promoter/PE exits dominate.
• Households absorb it on SIP autopilot, but 51% of August inflows went to small/mid-caps while foreigners sold large-caps. Nifty is down 11% YTD, 23% in dollars from peak.
• OVERWEIGHT large-caps versus mid/small in three gated tranches; UNDERWEIGHT the 2025–26 IPO cohort and INR duration. 

Highlights

• MRF reports a 10% increase in revenue but a 6.52% decline in net profit 

• Apollo records strongest YoY quarterly growth in 14 quarters, at 15.6%

• JK Tyre and CEAT see profitability contract sharply despite continued demand momentum

• In Depth: China’s Auto Export Boom Spurs Push to Manufacture Overseas
• China’s auto export engine was in overdrive in August, shipping more than 1 million vehicles for a third straight month.
• The momentum is fueling expectations that full year exports will hit 10 million cars.

• Yesterday’s oil market behavior once again helped support our scenario of a broad trading range for the prompt NYMEX crude oil contract for the time being.                
• More analysts are stating that oil prices are likely to “grind higher,” but no one appears to be assigning a dollar value to what the peak might be.                                     
• At the risk of being completely “buried” by our price scenario, we would suggest the odds of a material further gain in oil prices are less than a further retracement.