FFR September speculation rose +100Bps, responding to Lagging Indicators which recorded an increase in the rate of inflation. Last week, CME FedWatch started projecting a +100Bps September FFR increase probability of 18%, from the previous +75Bps increase of 82%, responding negatively to the US Core Inflation rate for August period to 6.3% YoY (Vs. Jul. 5.9%). In addition to the Labor Market, Core Inflation is one of the Lagging Indicators, the Fed’s benchmark in determining the FFR amount. This aggressive Hawkish speculation, coming after June and July rose +75Bps each, puts the US at risk of an economic recession. This can be seen from the widening of the UST2Y Yield Inversion spread (3.99%) Vs. UST10Y (3.46%)from 25Bps to 43Bps a week.
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