SOFR Option Weekly Commentary 7/10/26
Initial Jobless Claims came in lower than expected (215K) and ISM Services Employment came in higher than expected (51.2) as the labor market remains strong. Existing home sales fell, with average US home values at all-time highs. FOMC Minutes revealed a split Fed, with half favoring unchanged rates versus raising rates by year end.
The current odds of the Fed on Hold through the FOMC's Dec 9th meeting are 18.4% (down from 22.1% last week), while the odds of at least one 25 bp hike are now 81.6% (up from 77.9% last week). The 10Yr is currently trading @ 4.55%.
SOFR Option Vols were lower on the week (see attached spreadsheet).