What we are reading:
The Fed raised rates a quarter point on Wednesday, the first increase since 2023, and the 10-year closed at 5.01%. Also: diesel at a record, China's Treasuries at an 18-year low, a borrower booking future AI savings as EBITDA, and a paper arguing AI cannot invent anything.
⛽ Diesel set a record near $6.20 a gallon, and the executives say the binding constraint now is refining capacity rather than crude. https://www.wsj.com/business/energy-oil/oil-executives-say-the-great-fuel-crisis-is-here-b6b32030
🇨🇳 China's holdings of Treasuries fell to $618 billion in July, the lowest since August 2008, and total foreign holdings fell for a second month to $9.25 trillion. https://www.axios.com/2026/09/18/china-treasury-bonds-rates
🧮 A €3.5 billion borrower added €20 million of estimated future AI savings back to EBITDA, which is the difference between reported leverage of 8.44x and 9.3x. https://www.swissinfo.ch/eng/ai-future-savings-is-latest-ebitda-tweak-to-jolt-debt-investors/92080935
🤝 The OCC, Fed, FDIC and NCUA proposed guidance to replace the current third-party risk framework, tailored to size and complexity and setting no enforceable standards. https://www.occ.gov/news-issuances/bulletins/2026/bulletin-2026-46.html
✈️ A paper on why prediction from data cannot produce genuine novelty, anchored on the New York Times estimating in 1903 that flight was a million years off, nine weeks before Kitty Hawk. https://doi.org/10.1287/stsc.2024.0189
Our chart: banks hold $5.5 trillion more deposits than loans, and the gap widened $284 billion over the first eight months of this year rather than closing.
