Global Hawkishness Spurs Rates Rise

ECB hike, Fed comments fuel rates rise. Swap rates and Treasury yields rose across the curve today, initially propelled by a 75 bp rate hike by the ECB, which leaves the door open for sizeable hikes in the future as well. That hawkish sentiment was also echoed in the U.S., as Fed Chair Jerome Powell restated the Fed’s strong commitment to limiting inflation. As a result, the policy-influenced 2-year note rose ~8 bps to 3.51%, while the 10-year note rose ~6 bps to 3.32%.

Initial jobless claims exceeds expectations. The number of Americans filing new claims for unemployment benefits in the week that ended September 3rd was ~18,000 under the forecasted level of 240,000, coming in at 222,000. This is the lowest number of weekly jobless claims since the end of May, providing the Fed with more ammunition for a 75 bp hike rather than a more conservative 50 bp hike at the upcoming FOMC meeting.

Day ahead. Friday is highlighted by public comments from regional Fed Presidents Charles Evans and Esther George, as well as Fed Board of Governors member Christopher Waller. Data on wholesale inventories will be released at 10:00 AM ET.