|08:30||Empire State mfg||Mild decline expected this month|
|11:00||Fed outright Treasury coupon purchase|
$1.625 billion purchase covering maturities of nine months and under
|11:30||3- and 6-month bill auction||Steady at $45 billion and $42 billion respectively|
We think both the headline and ISM-equivalent versions of the Empire State manufacturing index will soften modestly in this month’s report.
Today’s Fed purchase: $1.625 billion of 1- to 9-month nominal coupons
Today’s bill auctions: 3- and 6-month bills
A quarter-point rate cut is all but guaranteed at this week’s FOMC meeting. Chair Powell is likely to view the strength in last week’s CPI as validation of the Fed’s decision to label earlier softness in prices as “transitory”, but not as an obstacle to a further adjustment in rates at this meeting. The dot plot will be more dovish than the previous edition but less dovish than the path of policy implied by market expectations. Chair Powell will yet again try to bridge that gap by emphasizing the heightened uncertainty in the outlook and the Fed’s determination to keep the expansion intact.