Risk Off on Stray Missile Induced Volatility

Tsys firmer, back near early session highs after second half risk-off driven volatility. Risk-off early in second half after unconfirmed reports of "stray" missile strike in Poland near Ukraine border. Tsys bounced as risk-off action ensued amid sporadic headlines and calls for security council meetings in Poland and Hungary. Pentagon officials are aware of the reports but can't corroborate.

• Tsys surged higher this morning after lower than forecasted PPI (MoM +0.2% vs. 0.4% est; YoY +8.0% vs. +8.3% est) saw Tsys extend early rally past last Thursday's post-CPI levels.
• BLS: The index for final demand goods moved up 0.6 percent in October, the largest advance since a 2.2-percent rise in June. Most of the October increase can be traced to a 2.7 percent jump in prices for final demand energy.
• FI support cooled after Philly Fed Harker, Fed Gov Cook and lastly Atlanta Fed Bostic offered cautionary opinions/outlooks: Harker: doesn't like to "base policy on a couple headline number", yet sees the Fed "going on hold some point next year". Cook: HAVE TO BE CAREFUL HOW MONETARY POLICY IS WIELDED, Bbg. Bostic: sees "glimmers of hope" that inflation is cooling, but expects more hikes as tighter money has not yet constrained business activity enough to seriously dent inflation.
• Year end pivot/hike step-down gains traction: Fed funds implied hike for Dec'22 at 50.9bp, Feb'23 cumulative 85.7bp to 4.70%, terminal funds rate 4.9% in May'23/Jun'23 (5.08% pre-CPI).