SOFR Option Weekly Commentary 8/21/26
This week's FOMC meeting minutes indicated that some members would vote to hike if inflation did not cool. WTI & Brent Crude futures creeped higher as US/Iran peace talks stalled. Focus on US National Debt passing $40 Trillion with unlikely Sep hike by FOMC pushed the 30YR yield to 5.30% (highest since 2007). The current odds of the Fed on Hold thru the FOMC's Sep 16th meeting are 61.6% (down from 67.4% last week) while the odds of at least one 25 bp hike by the Dec 9th meeting are now 71.8% (up from 67.4% last week). The 10Yr is currently trading @ 4.73%
SOFR Option Vols were mixed this week but are lower over the past two weeks (see attached spreadsheet).