SOFR Option Weekly Commentary 8/14/26
Today's Retail Sales & Univ of Michigan Sentiment numbers both came in lower than expected as consumer sales slowed last month. Coupled with CPI & PPI numbers earlier in the week which were roughly in line with expectations, traders pulled back on any imminent Fed hike thoughts. The current odds of the Fed on Hold thru the FOMC's Sep 16th meeting are 67.4% & for the Dec 9th meeting are 32.6% (up from 23% last week), while the odds of at least one 25 bp hike by year end are now 67.4% (down from 77% last week). The 10Yr is currently trading @ 4.69%
Sofr Option Vols were lower this week (see attached spread sheet).