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Perky ISM manu

JPY early trading

Guess who said this? No it wasn't Warsh but it is a current Fed official

Another sharp move JPY with Yen at session highs

US Treasury considering deploying TGA in the repo market..... via Bloomberg

Real 30s above 3%

Private wages down to 3.1% YoY

Benign YoY Dallas Fed trimmed mean PCE

Smart move by Japan's MOF to intervene (assuming) after Fed passed on a rate hike.

It has been fashionable in the post-QE era to attribute every long-end foray above 5% to some policy error, whether fiscal or monetary, but if anything long is still rich on the curve and has room to head higher. Long term 30s spread to overnight rates

Real 30s eyeballing 3%

Clearly USTs need more of an uncertainty premium going forward. Too much angst the day of an FOMC decision

If you want a hike today go to the White Mountains. Odds low you get one from the Fed at this meeting

USTs rationally IMO positioning for no hike tomorrow. With crude prices down another 5% and 1-year inflation swap down to 1.85, Fed has time on their side. 2s obviously best long if no hike but before announcement belly is a safer bet in case.

Conference Board labor market gauge continues to weaken

With 1-year inflation swap printing below 2%, Fed should pass on hiking this week

Bunched up front-end auctions Monday (2s & 5s) and Tuesday (7s) will keep the pressure on before the main event on Wed (FOMC). Sell side continues mostly projecting no rate change but market odds still a material 30-40%

Given the post-COVID inflation experience, its strange how little inflation risk the markets are pricing. 30y inflation swap is literally pinned to the Fed's inflation target (adjusting for PCE-CPI wedge). Same is true of 30y breakevens

Obviously a new era Fed. Don't remember the last time the rate decision of an FOMC meeting was this uncertain. With odds closing in on tossup, if nothing else it will be fun and exciting. July hike odds:

FWIW less forward guidance does mean more aggressive hedging so no surprise FFQ6 pricing higher hike odds than sell-side