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STIR: Powell’s Patience Holds Sway After A Day Of Mixed Drivers

STIR
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  • Fed Funds implied rates for near-term meetings are on net little changed from levels as US desks joined, holding increases seen after yesterday’s Powell’s "this is not a committee that feels like it's in a hurry to cut rates quickly”.
  • Cumulative cuts from 4.83% effective: 36bp Nov, 72bp Dec, 103bp Jan and 168bp June.
  • There have been conflicting forces today. Data has been mixed but on balance softer than expected. Job openings surprised higher but the quits rate showed a further decline to increasingly below pre-pandemic averages (something that tallies with job changer growth now below job stayers) plus ISM mfg had some notably soft components and construction spending also helped shift Q3 growth tracking lower.
  • However, WTI futures rising 5% on Iran-Israel missile strikes have provided a hawkish offset despite the broader FI rallies as part of typical risk-off flows.
  • Tomorrow’s focus is likely on the September ADP report in the continued build up to Friday’s payrolls. 
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  • Fed Funds implied rates for near-term meetings are on net little changed from levels as US desks joined, holding increases seen after yesterday’s Powell’s "this is not a committee that feels like it's in a hurry to cut rates quickly”.
  • Cumulative cuts from 4.83% effective: 36bp Nov, 72bp Dec, 103bp Jan and 168bp June.
  • There have been conflicting forces today. Data has been mixed but on balance softer than expected. Job openings surprised higher but the quits rate showed a further decline to increasingly below pre-pandemic averages (something that tallies with job changer growth now below job stayers) plus ISM mfg had some notably soft components and construction spending also helped shift Q3 growth tracking lower.
  • However, WTI futures rising 5% on Iran-Israel missile strikes have provided a hawkish offset despite the broader FI rallies as part of typical risk-off flows.
  • Tomorrow’s focus is likely on the September ADP report in the continued build up to Friday’s payrolls.