Post-PMI Extension Of Hawkish Fed Repricing

Some hawkish adjustments are seen in FOMC-dated OIS in the wake of the flash PMI data, with ~22.5bp of cuts priced through November (90% odds of a cut through that juncture) and ~36bp of cuts priced through year end (vs. ~25bp and ~39bp in the wake of the weekly jobless claims data).

• Headline readings were firmer than expected, while the snippets on the price components provide the latest survey-based source of inflationary worry.
• To repeat, the report noted that “both input costs and output prices meanwhile rose at faster rates, with manufacturing having taken over as the main source of price growth over the past two months.” Still, the survey did note that “However, the overall rate of selling price inflation remained below the average seen over the past year.”