Talking Points:
- This can be a challenging weekend for holding weekend risk given the ongoing and still developing scenario around Evergrande.
- The move in rates after this week’s FOMC[1] has continued and the 10 year yield has pushed up to a fresh two-month-high.
- Next week marks the Q4 open on Friday, but notably there will be no NFP[2] report on October 1st as that’s scheduled for a week later instead. The big driver on next week’s economic calendar our of the US is a batch of high-impact prints on Friday with PCE and PMI reports.
It was a big week in markets and, frankly, I think there has to be a lot of optimism with the way that price action has held up given all of the facts. While the week opened with pain as stocks gapped-down aggressively, a bit of hope punctuated the horizon as prices caught a bid around FOMC and continued to run higher on Thursday trade. So far on Friday we’re seeing a resistance hold but, deductively, this appears to be fairly positive.
The big driver this week was, of course, the Federal Reserve. The world was waiting for an announcement of taper that did not happen: Instead, the Central Bank warned that they were close to starting taper and it could happen in the next couple of months if labor market data didn’t disappoint. But, perhaps more surprising than a lack of a taper announcement is what showed up in the dot plot matrix, as the median forecast at the Fed now calls for a rate hike in 2022 whereas previously the expectation was for that first hike to take place in 2023.
In response rates markets have continued to run, yields on
