Three sessions, one box. ES opened Sunday night at 7,796, lost the swing low on Monday’s close and hasn’t closed back over it since. Every dip into the floor of the map got bought: Monday, Tuesday, and again in Wednesday’s last hour. Wednesday closed 7,721.50, down 84 on the week.
Underneath, the Fed story turned. October hike odds were about 73% on Monday. Williams said Tuesday there’s no urgency to raise rates, job openings came in soft at 7.08M against 7.23M, and Wednesday’s core PCE printed 0.2% for August against 0.3% expected, 3.0% on the year against 3.3%. The odds sit near 35% tonight and the 2-year fell to about 4.84%. Most of the PCE miss came from a change in how the government measures a few services, and the bond market noticed. The long end kept climbing, with the 30-year near 5.58%.
So the front end says the Fed is close to done and the long end doesn’t believe inflation is. Stocks are stuck between the two, and you can see it in the indexes. September closed with Nasdaq futures up about 3%, the S&P off 0.6%, the Dow down 4.5% and the Russell down 5.4%. The leaders held the index up. Everything that needs lower long rates sold.
The last hour Wednesday was the quarter-end rebalance Sunday’s note flagged. ES fell about 40 pts in the final 30 minutes on no news. Micron reported after the bell, beat and raised, and the stock barely moved.
Below the line: Sunday’s map graded, the new levels for Thursday and Friday, the plan, what 6 years of weeks like this one did next, and the payrolls playbook.
