Brandon Stitzel

After inflation, retail sales, empire manufacturing, and the Philadelphia Fed business outlook all came in below estimates last week, the market — as evidenced by Treasuries and forward curves — broadly disagrees with the Fed’s interest rate outlook.

Liz Truss resigns, the yen hits a 32-year low, U.S. rates hit a 15-year high, U.S. consumer expenditures start to slow, and the U.S. labor market continues to show signs of strength. All eyes are on the Fed’s meeting next week.

At his Jackson Hole speech, Federal Reserve Chair Powell indicated that the FOMC must continue to raise the Federal Funds rate and hold it at a restrictive level until it is confident inflation is under control. He specified that while the July CPI inflation reading was welcome news, it would not be enough on its own for the FOMC to change course on raising interest rates to an intentionally restrictive level.