We have the August PCE release in a few minutes.
While we can get some whipsaw on a higher/ lower number vs consensus, the market likely refocuses on the upcoming CPI as the more advanced inflation gauge before the October FOMC. We also get the Nonfarm Payrolls number on Friday, which has taken a backseat to the CPI too in recent months, per the Fed’s attention.
Oil gave back Monday's war premium. WTI fell 3.5% on Tuesday to $89.4, as Saudi Arabia restarted its East-West pipeline and resumed loadings at Yanbu, bypassing the Strait of Hormuz. Trump has since denied offering Iran any sanctions relief, so the headline risk has not gone away.
Tuesday's US data was soft. Consumer confidence fell to 81.9, the lowest since 2014, and job openings came in below expectations. That cut the odds of an October hike to roughly 50%, from about 70% on Monday. Interestingly, the long end did not rally, and the 30Y at 5.56% is still at its highest since 2004.
What concerns my discretionary bias is that yields are not falling on weaker data. MOVE (bond volatility index) is at 107, its highest since March.
Quarter-end rebalancing ends today, with the potential window-dressing trades being the dominant theme. But we are still inside the seasonally weak window I flagged on Monday.
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Disclaimer
This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.