What Matters in Wednesday’s Fed Announcement?

The ongoing disagreement in the market regarding the size of Wednesday’s Fed rate cut makes it a very interesting Fed meeting.  That said, the size of the cut at this meeting probably has less to do with the market reaction than the dot plot landscape (i.e. the changes in each Fed member’s rate outlook as communicated in the Summary of Economic Projections).  Powell’s 2:30pm press conference will also add clarity.  As always “volatility” does not have a directional connotation.   Things could go either way, and may do so several times before finally picking a side. 

Econ Data / Events

Retail Sales 

0.1 vs -0.2 f’cast, 1.0 prev

Industrial Production

0.8 vs 0.2 f’cast, -0.9 prev

NAHB Builder Confidence

41 vs 40 f’cast, 39 prev

Market Movement Recap

11:06 AM Generally weaker after Retail Sales and Industrial Production.  MBS down an eighth and 10yr up 1.9bps at 3.638.

01:45 PM sideways at weaker levels.  MBS still down an eighth and 10yr up 2.7bps at 3.646

03:15 PM Bonds not looking like they want to sell anymore today. MBS down 3 ticks (.09) and 10yr up 2bps at 3.639