How Did Powell Bring The Pain With As-Expected Remarks?

This morning, we said the bond market appropriately and accurately priced in Powell's Jackson Hole speech ahead of time, but the 3.6% losses in the S&P raise some questions.  In other words, stocks don't look like they were as clairvoyant as bonds.  One conclusion is that bonds may indeed have been a bit bummed by Powell's bluntness, but then managed to pick up a few buyers as the fled from the stock market seeking safer havens.  Fully expected or not, Powell's message was entirely on-brand for all the recent Fed comments in August, including his own comments in the July 27th press conference.  

Econ Data / Events
    • PCE Price Index
      • -0.1 vs +1.0 prev
    • Core PCE 
      • 0.1 vs +0.3 f'cast, 0.6 prev
    • Y/Y Core PCE
      • 4.6 vs 4.7 f'cast, 4.8 prev
Market Movement Recap
08:37 AM

Modestly weaker overnight and little-changed after decent PCE inflation data.  MBS are still down an eighth, and 10yr yields are up 2bps at 3.05 after being as high as 3.086 overnight. 

11:25 AM

Volatility before and after Powell's speech.  Treasuries near unchanged on the day (closer to best levels of the day).  MBS have seen huge illiquidity at times.  Prices are technically down 3/8ths, but trades are more likely to be executed closer to unchanged levels or a few ticks below. 

04:25 PM

New Lows of the day for MBS (factoring out late morning illiquidity).  4.5 coupons down 10 ticks (.31) at 99-29 (99.91).  10yr yields doing better, holding near lows and currently unchanged at 3.032.

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