After the first two weeks of volatile volatility, the levels reduced for the next three weeks and returned to where they began. Last week the calmness vanished again and the rising VIX created another negative impact on global markets.
For now, most participants are firm that the next FOMC meeting on 18th September will be the start of rate cuts. But the quantum and PCE of it will be driven by data over the next few months. The first of them was the unemployment rate which was stable at 4.2% a bit lower than Han's last release.
This change in data led to the Fed rate Swap market adjusting the odds giving a higher probability to two rate Cuts and first one being a 25bps cut. This did not reverse the fall in bond yields for now as they stood at a critical level before the meeting.
The current week is crucial as Inflation data gets released on 11th September. If the data witnesses a pause or even a reversal in fall then rate estimates will see further adjustment. Might resulting rise in yields and VIX impacting the equity markets again. In addition to this on 10th September first and only US presidential debate takes place.
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