u/Trend-Rebel

Jobless claims at 8:30. Bank earnings tomorrow — JPMorgan, Wells Fargo, BlackRock. September CPI next Tuesday.

Carry-over: S&P closed Wednesday at 7,818.93, a new record close above August 13's 7,816.70. The FOMC minutes moved markets little despite a hawkish read. Key language: most officials see another hike likely "by year end." That's December, not October 27-28. Goldman and JPMorgan both moved their next hike forecast to December after the minutes.

Dollar rose 0.42%. Yields led higher. S&P hit a record anyway.

October 27-28 is now expected to be a skip. December 17-18 is the live meeting.

Trade balance at 8:30. FOMC minutes tomorrow. Bank earnings Friday.

Nasdaq touched 27,544 this morning, a new all-time high. S&P at 7,774, 42 points from its own record set August 13.

Two sessions since 29,000 jobs and a 70% to 14% collapse in November hike odds. The market has added roughly 1.4% in two days.

The bad-news-is-good-news trade has the index approaching a record. The consumer running it is on negative real wages for the sixth straight month.

Light today. FOMC minutes Wednesday. Bank earnings start next Friday.

Carry-over: 29,000 jobs in September against 90,000 expected. July revised to -10,000, August trimmed to 133,000. Combined revisions of -60,000. Unemployment 4.2%. Wages rose 0.1% on the month, 3.0% year over year, trailing inflation for what may be the sixth straight month. S&P rose on the print. November hike odds fell from about 70% to 14%.

S&P opened this morning at 7,726, up 0.73% from Friday's close.

The bad news got bought. Fourth time this quarter.

ADP and August PCE at 8:30. Q3 ends today. Micron after the close. Nike tomorrow.

PCE is the one that matters. August core expected at 3.4% year over year. CME pricing two more hikes this year. Warsh said at Jackson Hole he needs to see inflation actually moving, not just a good print or two.

S&P opened slightly lower at 7,671. The pattern this quarter has been to buy the resolution of uncertainty. PCE this morning is the first data point of the last week of Q3.

Conference Board consumer confidence and JOLTS at 10. Nike before the open. OpenAI DevDay in San Francisco today. Q3 ends tomorrow. Multiple Fed speakers through the week.

Carry-over: The summit tariff details landed Monday. The 30-for-30 framework covers about $30 billion each side, US agricultural products and coal going to China, Chinese toys and household goods coming here. Chips, semiconductors, rare earths and advanced tech are not on either list. There is also a US-China Super Intelligence Dialogue commitment to exchange views on AI risks by November, which is a meeting, not an agreement.

S&P closed Monday down 0.77% to 7,683. Nasdaq down 0.92%. The market that gained 1% last week on summit optimism gave some of it back on the details.

Sam Altman was at the state dinner Thursday. OpenAI DevDay is today.

Bowman at 8:15. Full details of the US-China tariff reduction agreement release today, the substance behind last week's summit. Q3 ends Wednesday. Then PCE midweek, Micron earnings Thursday after the close, September jobs report Friday.

OpenAI DevDay is Tuesday in San Francisco. Sam Altman sat across from Xi at the state dinner Thursday. He's releasing products Tuesday.

Carry-over: S&P gained about 1% last week despite the summit delivering a 47-day truce extension and no joint statement. CME is now pricing two more hikes this year, October and December.

Micron guided Q4 revenue at $49-51 billion. Samsung unveiled HBM4 last week while everyone was watching the summit. Those two things are going to meet somewhere in Thursday's earnings call.

Loaded week!

End of Q3 today. Light data. Michigan final sentiment at 10.

Carry-over: the analysts were right. Trade truce extended to January 10, 47 more days, announced before the bilateral even started. No joint statement. No breakthrough on AI, rare earths, tariffs or Taiwan. Xi arrived Wednesday, met Trump for about an hour Thursday, and left. The one concrete outcome was negotiated by Bessent and He Lifeng the night before.

The real conversations may have happened at the state dinner. Musk, Cook, Bezos, Altman, Huang and Pichai sat across from Xi with chip exports and rare earths as the unspoken agenda. Nothing from that table has come out yet.

Samsung unveiled HBM4 this week. Quietly, on the same day.

S&P essentially flat this morning at 7,704. The market priced the optimistic scenario on Monday and got a truce extension. It absorbed the result without much complaint.

Xi arrives in Washington today. State dinner Thursday. PMIs Wednesday morning.

Carry-over: Monday was the best session since August 4. Nasdaq closed at 27,122, its first record since June. S&P up 1.49% to 7,764. AMD crossed $1 trillion market cap. Intel and ARM both up 10%. Meta surged on its Muse AI app hitting the top of the App Store. Oil fell more than 4% on Iran diplomacy hopes, pulling yields down with it.

Futures holding roughly flat this morning after the move.

Michigan consumer sentiment was 47.8 last week, second lowest on record. The Nasdaq just closed at an all-time high. At some point those two things are going to need a common explanation.

Michigan sentiment at 10. Light otherwise.

Carry-over: S&P up 1.1% this morning after a strong Thursday, continuing the post-hike bounce. Nasdaq up 1.7%. 10-year eased to 4.94% from the 4.97% peak earlier in the week. The market spent six weeks selling into Wednesday's decision and has spent two sessions buying the resolution.

Record close still sits at 7,816 from August 13. About 2.3% away.

Warsh's thesis on Tuesday landed right — the dot plot mattered more than the vote and still does. November 4-5 is the next test.

Jobless claims at 8:30. Philly Fed manufacturing same time.

Yesterday: 25bp, unanimous 12-0, first hike since July 2023. New range 3.75 to 4.00%. Dot plot showed 16 of 18 participants wanting at least one more hike this year, majority see the median ending 2026 at 4.125%. Warsh's statement was 130 words, press conference 22 minutes. He still did not submit a dot, second consecutive meeting.

Futures this morning are pointing to a significantly higher open, E-Mini bid around 7,687, up about 0.85%. The market spent six straight sessions falling into the hike. It is apparently buying the resolution.

October hike odds are live. Next meeting November 4-5.

Retail sales at 8:30. FOMC at 2pm, press conference 2:30, dot plot alongside the vote.

S&P opened around 7,585 this morning, down slightly. 10-year near 4.97%. Hike priced at 85-90%. Six straight lower sessions from the post-Nvidia high.

Warsh's first dot as chair lands this afternoon.

That's the day.

The vote is not the thing anymore.

Going into Friday's CPI, September was the question. Core came in at 0.3% month over month against 0.2% expected, hike odds moved to near-certainty, and the September question got answered before the meeting started. The market is now pricing something else.

Futures as of Monday closed with the fed funds rate at roughly 4.2% by December and 4.6% by September 2027. That is not one hike. That is the market calling September and December, with further tightening next year.

Here is where it gets interesting.

The June dot plot had 18 participants. Eight placed year-end rates at 3.625%, which is today's level, meaning no hikes. One dot was even below that, a cut. Three wanted 3.875%, one hike. Five wanted 4.125%, two hikes. One wanted 4.375%, three.

So in June, six members already wanted two or more hikes in 2026. Nine wanted no hike at all. The committee was genuinely split. The median was somewhere around one hike, which is why the June statement held.

Since June: 162,000 jobs in August against 53,000 expected with July revised positive, core CPI accelerated to 0.3% monthly against 0.2% forecast, ISM Services prices paid hit 72.6 for the fifth time above 70, and the 10-year has moved from around 4.4% to nearly 5%.

The data since June confirmed everything the hawks needed and then some.

So the question for tomorrow's SEP is whether the committee median moves. In June it was around one hike for year-end. If the August data pushed even two or three previously-hold members into the one-hike column, the median could shift to 4.125%, which is two hikes for 2026. That would make December the committee's stated base case, not just the market's working assumption.

The 10-year at 4.97% is already pricing that. The question is whether the dots confirm it or disappoint.

Then there is Warsh's first dot.

He did not submit one in June, his first meeting as chair. He cited an aversion to forward guidance and said the dot plot works better in theory than in practice. Tomorrow he submits for the first time. His dot is the most consequential unknown in the whole release, not because it moves the median but because it tells you where the chair himself sees the terminal rate.

A hawkish first dot, say 4.125% or above, is a policy statement independent of the vote. It says he sees at least two moves and that December is his expectation. A moderate dot, 3.875%, is a one-and-done signal. The market would read them completely differently even against an identical vote.

I keep landing on the dot as the thing worth watching more than the decision, and I cannot quite work out if that is right or if the vote still matters more than I am giving it credit for.

Retail sales also land at 8:30 tomorrow, same morning. If August retail comes in weak, that is a complicated afternoon. A hold case from the consumer data arriving four hours before a near-certain hike is either ignored or it matters. I don't know which.

FOMC meeting starts today, decision Wednesday at 2pm. No economic data of consequence before then.

Carry-over: CPI Friday printed 3.4% year over year on the headline, in line with expectations. Core came in at 0.3% month over month against 0.2% forecast. That one tenth of a point on the monthly core pace was enough. Hike odds moved to near-certainty after the release. S&P closed Friday around 7,591, five straight sessions lower from the post-Nvidia high two weeks ago.

Wednesday also brings Warsh's first dot plot as chair. The vote and the dots land at the same moment.

Two days.

PPI tomorrow at 8:30, CPI Friday at 8:30. Both are the last data the committee sees before the blackout ends and the decision lands September 16. No Fedspeak until after the meeting.

Carry-over: S&P closed 7,673, down 0.58%. Nasdaq down 0.32%. 10-year at 4.80%, 30-year at 5.25%. Yesterday's thesis argued the market is treating Thursday and Friday as Warsh's reaction function when he told us at Jackson Hole he was not going to give one. Comments are open on that.

Hike odds sitting around 58%.

Leaning hold, narrowly. Not because the data supports it but because Warsh said the reaction function is his and he has not told us what it is. Update me if this ages badly by Friday.

Close is number 25, first use. It's the right one today because there's a live resolution date two days away and a specific position attached to it. People who have a view will engage, and people who just want to watch will come back Friday when it resolves either way.

The 10-year at 4.80% and 30-year at 5.25% are worth noting for your own read. If the bond market was confident about a hike, you'd expect those to be higher heading into the last data week, not essentially flat from last Friday. The long end is not screaming hike the way it was after Jackson Hole. That's part of the hold lean.

🍌 See you all on the trading floor

One week from today, 2pm September 16, the FOMC announces. Hike odds sitting around 58% going into Thursday's CPI print. The whole conversation this week is if CPI comes in above X then hike, if below then hold.

The problem is Warsh said at Jackson Hole he is not going to give us that sentence.

He called forward guidance ill-suited to normal times and said it overstayed its welcome. Said he is committed to a discipline, not a decision. Explicitly refused to give a reaction function when asked directly. And now the market has spent two weeks reverse-engineering one for him from ISM prices paid and payroll prints and treasury moves.

Maybe that is the right thing to do. Or maybe every CPI trade this Thursday is built on a foundation he told us he was not going to provide.

There is a second thing that has not come up much this week. September 16 is one of four dot plot meetings. The dots update in March, June, September and December. The June 2026 dot plot showed year-end rate projections scattered between 3.6% and 4.1%, which at current rates means the committee median already had somewhere between zero and one hike penciled in for the second half of the year. If the median dot was already pointing to one hike, Thursday does not create the decision. It just affects whether the committee feels comfortable following through on one they already published.

A CPI that confirms the hike case doesn't surprise anyone with a dot. A CPI that undercuts the hike case asks the committee to walk back something they already showed us. Those are different situations and the market is treating them the same.

Then there is the specific thing I keep coming back to.

Warsh did not submit a dot in June. First meeting as chair, and the SEP had projections from every other member but not from him. His first dot lands September 16, the same day as the decision, the same afternoon as the press conference. The chair of the Federal Reserve has no publicly stated rate projection on record. We have the Jackson Hole speech, the press conference remarks, the July minutes, and what the three dissenters said. That is it.

Two things we cannot make fit.

Three regional presidents dissented for a hike in July. Got outvoted 9-3. The minutes showed more hawkish sentiment than the vote reflected. The June dots already had at least some members above current rates for year-end. If the hike case was already majority sentiment heading into summer, a 162,000 jobs print and two ISM prices surveys above 70 should not be moving September odds from 40% to 58%. Those are the hawks getting confirmed, not a new argument getting built.

And now the Fed is in blackout. No more Fedspeak until after September 16. Waller backed a hold last week. Three regional presidents wanted a hike in July. Warsh is somewhere between them and has not said where. CPI Thursday is the last data and then silence until 2pm September 16. Every piece of analysis between those two moments is someone filling in a reaction function the chair said he was not going to give us.

Cannot tell if Thursday's CPI is genuinely the decision or whether the decision was already made and we are just watching the market figure it out.

First trading day of the week after Labor Day. CPI Thursday at 8:30, FOMC September 15-16, one week from today.

Carry-over: 162,000 jobs in August, almost three times expectations, and July revised from -23,000 to +21,000. The jobless summer was never actually negative. Hike odds sitting around 60-65% going into the week. 10-year at 4.78%, 30-year at 5.24%.

The Sunday post asked whether CPI Thursday matters more than last week's jobs number. The comments are open if you have a view on that.

Over or under on August core CPI at 2.5% year over year?

Jobs at 8:30. Consensus around 55,000, unemployment expected to hold at 4.1%. July was -23,000, May and June were revised down a combined 103,000. Three months of historically soft payrolls going into the last jobs report before the September 15 FOMC.

Carry-over: ISM Services prices paid came in at 72.6 yesterday, fifth time above 70 in six months. The week handed you both sides of the argument. Weak jobs from ADP and JOLTs, hot prices from both ISM surveys. Waller came out yesterday backing a September hold.

The reaction function is inverted this cycle. In 2024 a weak number meant cuts and a rally. Right now a weak number means hold, which takes the hike off, but it doesn't give you a cut either. And the inflation side of the argument is still running hot regardless.

Does the number this morning actually matter, or did ISM Services settle September on Thursday?

ISM Services just came in at 55.4, above the 54.3 expected, with prices paid jumping to 72.6 from 70.3, the fifth time above 70 in six months. Business activity 61.7, new orders 60.9, both accelerating. Employment still contracting at 47.8.

That is the answer to yesterday's post. ADP printed 38,000 weak jobs and the hold argument looked clean. Services prices paid just went the other direction in the same week.

Payrolls tomorrow. July was -23,000. Consensus for August is somewhere around 100,000.

Two prints pointing opposite ways at the same time, 12 days before FOMC. Which one does Warsh read?

ADP printed this morning at 38,000 private sector jobs for August against 47,000 expected. Manufacturing shed 17,000 outright. The prior month was 44,000 and got revised up slightly to 46,000, so two consecutive months of historically weak private payrolls, and this one is the softer of the two.

For context, those numbers would have been alarming in a normal year. July's official government payrolls came in at -23,000. If ADP is tracking anything real, the private sector added somewhere between 35,000 and 45,000 jobs for two months running while the headline number was actually negative. That is not a labor market that needs to be restrained.

And yet.

ISM Manufacturing prices paid sat at 71.1 in August, unchanged from July. Both months came in at a level that signals significant input cost pressure. JOLTs job openings fell to 7.27 million and the quits rate slipped to 1.9%, below the 2.0% level economists watch as a threshold for sustained labor cooling. Base pay up 3.2% year over year, which is still below CPI at 3.4%, meaning real wages are negative for the fourth or fifth month running depending on how you count.

So the labor market is giving you weak job creation, a falling quits rate, and real wages that are still being eaten by inflation. That is textbook cover for a hold.

Here is where I keep getting stuck.

Warsh said at Jackson Hole last Friday that he would be hard pressed to describe financial conditions as restrictive. He said 54% of the PCE basket is running above 3% inflation. He said he is committed to a discipline, not a decision, which means he is not telling you what he will do in September. But he also said, pretty plainly, that the thing he needs to see is inflation actually moving to the target, not just a good print or two.

The labor side of the mandate is giving him permission to hold. He told you the labor side is not what he is primarily watching.

ISM Services prints at 10 this morning and the prices sub-index is the number I am interested in. Manufacturing prices paid at 71.1 for two straight months is hot. If services comes in with the same signal, the hold argument from ADP stops mattering and September is a coin flip regardless of Friday's payrolls number.

The other thing sitting in the ADP release that I have not seen anyone pull out. Base pay for job-changers is up 4.7% and gross pay for job-changers is up 7.3%. Job-stayers are at 3.0% base and 4.4% gross. That gap between stayers and changers is wider than it was a year ago. People who move jobs are still getting paid well to do it. That is not a labor market in distress, it is one where the distress is uneven and the headline is masking it.

The thing I cannot resolve is whether any of this actually moves September or whether September was already decided at Jackson Hole. Warsh said what he said. The data since then has been uniformly soft on jobs and sticky on prices. That combination, if it holds through Friday, gives him the argument for a hold and the argument for a hike in the same week, and he has told you he will not tell you which way he is leaning.

I keep landing on hold at about 60% and I do not fully trust it.

Talk me out of it.

ADP at 8:15, then ISM Services and Fed Beige Book this afternoon. Payrolls Friday. FOMC in 13 days.

Carry-over: yesterday gave you a mixed read in a single print. ISM Manufacturing came in at 54.6 against 55.6 prior, eighth straight month of expansion but demand sentiment slipped from 3.5-to-1 positive comments down to 2-to-1. New orders dropped to 53.7 from 56.7. Prices paid stayed at 71.1, same as July, still very hot. JOLTs openings fell to 7.27 million and the quits rate slipped to 1.9%, below the level economists watch as a labor cooling signal.

So manufacturing is slowing and still expensive at the same time. S&P closed 7,631, Nasdaq down just over 1%.

Hike odds sitting around 50/50 going into jobs week with Warsh having said he needs to see inflation actually moving, not just a good print or two.

What would payrolls Friday need to say to actually settle September for you?