FED Watch: Strangely Hawkish

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Discussion

FED Chair Jerome Powell went out of his way today to walk November pricing for 50 to below 50%, closing the day at 38%.

After maximally dovish FEDspeak post-FOMC, his direct comments were quite strange. It’s not as if 50 pricing got up to an uncomfortable 70-80%; it’s been consistently around 50-60. Perhaps he has tomorrow’s JOLTS report and/or Friday’s NFP in hand and wants to prep the market for a hawkish move in rates. I’m not really sure, and frankly even if he does his comments are still odd given what Timiraos just wrote about low rates not easily underwriting a soft landing.

From a SPY perspective, this relatively hawkish change in tone does make it a bit easier for the market to move down to that key $540-550 level.