Oct 10. Treading water
-While wage data in Friday’s employment report were reassuringly strong, with average hourly earnings +0.5, the payroll data were skewed by weather, and selling in treasuries was arrested as shorts closed positions. The market is now more or less treading water, though the euro is higher, partially in response to ECB board member Lautenschlaeger saying the ECB should trim asset purchases in 2018. The binary solution regarding Catalonia appears to have transitioned to a grey area, with several large companies saying they are relocating headquarters from Barcelona to Madrid.
–Press on Trump is rather negative, with the Corker twitter-spat causing some to re-evaluate the chances of a tax deal, however, there is no discernible effect on US stocks.
–NFIB small business optimism index this morning expected 105.4. This data has remained buoyant since the election, near 12 year highs. Kashkari speaks at 10:00. Treasury auctions of 3 and 10 year notes tomorrow, followed by FOMC minutes. 30’s auctioned on Thursday.
–January’18 FF contract at 9865 indicates 80% odds of a hike at the December FOMC. Jan’18/Jan’19 spread closed at 33.5. While that’s a recent high, it still projects well under two hikes for next year, probably too low.
