10yr Yields, CESI and the Run Up to FOMC

I could be wrong, but based on my recollection the wise guys were predicting even higher odds of a rate cut prior to this latest reading. I seem to recall rate cut probabilities for the September meeting being on the order of 10-12% higher than the current 86%.

cme

What could have changed? Well, there’s the reflationary mini-bounce in progress, shown here as manifested in the 10yr bond yield.

tnx

And there’s the Citi Economic Surprise Index (courtesy of Yardeni.com).

economic surprise index

Okay, so the CESI is bouncing. But what does that mean, functionally? Well for one thing, this…

cesi

Taken at face value this economic indicator has unhinged from its usual spot, tied to the hip of the 10yr yield. I don’t make a habit of trying to outguess the Fed but personally, I would not be surprised to see the rate cut but also Powell weighing in yet again as less dovish than the market wishes or even currently expects.

Subscribe to NFTRH Premium (monthly at USD $35.00 or a discounted yearly at USD $365.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas. You can also keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Follow via Twitter @NFTRHgt or StockTwits.