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Jobs, Orders Data Doesn't Preclude 75Bp Sep Hike, Fed Blackout in 1 Wk

US TSYS

Tsys trading moderately higher after the bell, near midmorning highs after a somewhat volatile first half, curves bull steepening (2s10s +5.363 at -20.069).

  • Tsys whipsawed, extending session range to the down and upside in short order after August jobs gain of +315k - little better than +298k est while focus turned to avg hourly earnings, unemployment misses. Tsys extended highs after midmorning data missed est's: Factory Orders -1.0% vs. 0.2%, Durables -0.1% vs. 0.0% est.
  • In-line with sporadic selling, BMO analysts summed up the in-line to mildly softer data saying "there is nothing in today's data that would bring into question Powell's ability to hike 75 bp on Sept 21 in the event the CPI release justifies such a move."
  • Nevertheless, markets appeared to have taken data with a dovish tone as short end markets started to discount chances of 75bp hike at Sep 21 FOMC.(appr 60% vs. 75% on Thursday): Short end Eurodollar futures, lead quarterly EDU2 +0.0725 at 96.665 session high.
  • Meanwhile, US markets closed Monday for extended holiday weekend, giving Fed speakers limited time to express their policy leaning ahead next media blackout next Friday at midnight.
  • Currently, 2-Yr yield is down 10.2bps at 3.3976%, 5-Yr is down 9.8bps at 3.2996%, 10-Yr is down 5.8bps at 3.195%, and 30-Yr is down 1.7bps at 3.3444%
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Tsys trading moderately higher after the bell, near midmorning highs after a somewhat volatile first half, curves bull steepening (2s10s +5.363 at -20.069).

  • Tsys whipsawed, extending session range to the down and upside in short order after August jobs gain of +315k - little better than +298k est while focus turned to avg hourly earnings, unemployment misses. Tsys extended highs after midmorning data missed est's: Factory Orders -1.0% vs. 0.2%, Durables -0.1% vs. 0.0% est.
  • In-line with sporadic selling, BMO analysts summed up the in-line to mildly softer data saying "there is nothing in today's data that would bring into question Powell's ability to hike 75 bp on Sept 21 in the event the CPI release justifies such a move."
  • Nevertheless, markets appeared to have taken data with a dovish tone as short end markets started to discount chances of 75bp hike at Sep 21 FOMC.(appr 60% vs. 75% on Thursday): Short end Eurodollar futures, lead quarterly EDU2 +0.0725 at 96.665 session high.
  • Meanwhile, US markets closed Monday for extended holiday weekend, giving Fed speakers limited time to express their policy leaning ahead next media blackout next Friday at midnight.
  • Currently, 2-Yr yield is down 10.2bps at 3.3976%, 5-Yr is down 9.8bps at 3.2996%, 10-Yr is down 5.8bps at 3.195%, and 30-Yr is down 1.7bps at 3.3444%