My apologies for the commentary coming out later than normal a few times this week.  I've been doing battle with water here in the Pacific Northwest, and spent most of last night swimming in my crawl space.  Had I penned The Day Ahead in the wee hours of the morning as I normally do (a benefit of working with financial markets from the West Coast), I imagine it would have been substantially similar to what you're about to read.  The only difference is that we can now talk about the data in retrospect as it's already out.  (The data is out.  It didn't matter)

There is a fairly simple, ongoing theme intact on this week before next week's Fed Announcement.  The last time the Fed lifted rates from a long stint at all-time lows was more than 10 years ago, and by their admission, should have been sooner.  Combined with the wholly unprecedented nature of global economic events and monetary policy over the past 7 years, next week is a huge deal.

Why so huge?  After all, it is a foregone conclusion that the Fed will raise rate (on the nearly nonexistent chance that they don't, I can't even imagine what the market reaction might be, but I think it would be the single biggest condemnation of market confidence in modern economic history). 

The hugeness wouldn't be because the Fed hike surprised anyone.  Rather, it would simply be due to the official passing of the much-anticipated event, and the green light finally turning on for everyone's post-Fed-hike trading strategy.  THAT'S the wild card.  Bottom line: we all know they'll hike.  What we don't know is how everyone else will trade the fact afterward.

That sort of anticipation renders almost any other market development inconsequential in the interim (here's that theme referenced above).  As such, we see a lot of "following" on the part of Treasuries (which have obviously had a keen eye on oil and equities).  Even then, bonds have just been flat.  We've been discussing this 2.20-2.24 range for several days now, and although yesterday tested a break above that range, we quickly found ourselves back in it.  The only report with much hope of changing that will be tomorrow's Retail Sales data, but even then, it's a tall order.