SOFR Option Weekly Commentary 8/28/26
Core PCE MoM (+0.2%) & YoY (+3.3%) came in as expected in this week's release. Chairman Warsh's statement in Jackson Hole, WY - “Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job,” (in adhering to a 2.0% target) took center stage as SOFR futures sold off today. The current odds of the Fed on Hold thru the FOMC's Sep 16th meeting are 42.5% (down from 61.6% last week) while the odds of at least one 25 bp hike by the Dec 9th meeting are now 89.1% (up from 71.8% last week). The 10Yr is currently trading @ 4.72%
SOFR Option Vols were higher today but are lower for the week (see attached spreadsheet).