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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

Repeats Story Initially Transmitted at 22:40 GMT Sep 16/18:40 EST Sep 16
     CHICAGO (MNI) - A quick overview of events to keep an eye on in the week
     - Fed enters media blackout this Friday at midnight (through September 27).
Markets fully anticipating another 0.25bp hike at the September 25-26 FOMC.
Note, the September FOMC is meeting will be accompanied by a Summary of Economic
Projections and a press conference by the Chair.
     The prior week's sell-off in near expiry Eurodollar futures has pushed
December hike expectations higher, however, while dealers are starting to mirror
more hawkish expectations through 2019 as well.
     Goldman Sachs has recently reiterated their expectations of two more hikes
in 2018 followed by three more in 2019. Nomura also expects two more hikes in
2018 "and two hikes in 2019 before the FOMC takes an extended pause through
     "The Fed balance sheet roll-off is likely to continue in the background,
raising long-term interest rates only gradually, Nomura added, while "notable
risks include aggressive trade policy by Trump administration and a sharp
deterioration in financial conditions."
     - Muted data risk with modest calendar ahead, largely centered on various
housing metrics: Housing starts (1.245m est) and building permits on Wednesday,
Existing home sales on Thursday.
     Credit Suisse economists said that "after two months of sluggish
performance, we expect housing starts to partially recover in August, rising
4.5% MoM to 1220k." On Existing home sales, CS expects the level "to decline for
the fifth consecutive month in August, falling 0.4% MoM to 5.32M."
     Aside from housing data, July net TICs flow will be released Tuesday,
August leading indicators (0.5% est) midmorning Thursday.
     - Political headline watching, ongoing but increasingly discounted by
markets (due to frequency, uncertain severity and or veracity of reports from
media, official releases from White House and/or Twitter).
     - Underlying emerging Market (EM) contagion concerns remain, though US
officials say US less prone to contagion/spill-over. Meanwhile, trade war/tariff
negotiations continue, underlying risk-off support for rates.
     For example, U.S. President Trump told his advisers late Friday to proceed
with $200B tariffs on China despite talks, rates pared weakness soon after while
equity prices reversed course, trading lower after posting modest gain.
Calendar of next week's market events (prior, estimate):
- Sep 15 Fed media blackout kicked in Saturday, runs through Sep 27 
- Sep 17 Sep Empire Manufacturing Index (25.6, 23.8) 0830ET
- Sep 18 Sep NY Fed Business Leaders Index (14.5, --) 0830ET
- Sep 18 15-Sep Redbook retail sales m/m (--, --) 0855ET
- Sep 18 Sep NAHB home builder index (67, --) 1000ET
- Sep 18 Jul net TICS flows (--, --) 1600ET
- Sep 18 Jul long term TICS flows 1600ET
- Sep 19 14-Sep MBA Mortgage Applications (--, --) 0700ET
- Sep 19 Q2 current account balance (-$124.1b, -103.0b) 0830ET
- Sep 19 Aug housing starts (1.168m, 1.245m) 0830ET
- Sep 19 Aug building permits (1.303m, 1.320m) 0830ET
- Sep 19 14-Sep crude oil stocks ex. SPR w/w 1030ET
- Sep 20 15-Sep jobless claims (204k, 207k) 0830ET
- Sep 20 Sep Philadelphia Fed Mfg Index (11.9, 19.6) 0830ET
- Sep 20 16-Sep Bloomberg comfort index (--, --) 0945ET
- Sep 20 Aug existing home sales (5.34m, 5.36m) 1000ET
- Sep 20 Aug leading indicators (0.6%, 0.5%) 1000ET
- Sep 20 14-Sep natural gas stocks w/w (--, --) 1030ET
- Sep 20 19-Sep Fed weekly securities holdings 1630ET
- Sep 21 Sep Markit Services Index (flash) (54.8, --) 0945ET
- Sep 21 Sep Markit Mfg Index (flash) (54.7, --) 0945ET
- Sep 21 Aug BLS state payrolls 1000ET 
- Sep 21 Q3 St. Louis Fed Real GDP Nowcast (-- , --) 1100ET
- Sep 21 Q3 NY Fed GDP Nowcast (--, --) 1115ET
--MNI Chicago Bureau; tel: +1 312-431-0089; email:
--MNI Washington Bureau; tel: +1 202-371-2121; email: