The Morning Hammer: Let’s Eat Some Dove Soup

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Traders are buying into the Fed's hawkish narrative.

On Friday, FOMC Chair Janet Yellen very clearly put rate hikes on the table, and market are buying in.

Fed Funds futures now imply a 65% chance of a December rate hike, up from 47% a week ago.

And September is up to 42%

This has gold and silver slightly offf and the dollar up huge

Overnight, Italian business manufacturing missed expectations, as did Greek GDP, Swedish retail sales, and Hong Kong retail sales. Australian home sales were also weak.

European equity markets are red, while SPX futures are flat.

We've got some important economic data today, with personal income/spending, PCE deflator, and Dallas Fed numbers on tap.

Even though the Fed's signalling pretty hard that rate hikes are en route, folks will be watching the PCE deflator closely since it's the Fed's preferred inflation indicator.

If it's strong, I'd assume folks push those rate hike odds up even more, and we could probably see an intraday selloff in US Treasuries (which are up fractionally in the early going).

Beyond that, it looks like we're going to close out August the way we came in — quietly.

The VIX has been ticking up after putting in what looks like a major low on August 8, but we're still not seeing much actual movement.

We haven't had a 1% down day in SPX since June 27.

And it feel slike the more people look for one, the less likely it is to happen.

Volatility is mean reverting.

Things go crazy, and then they get quiet. And things get quiet, and then they go crazy.

This quiet period today though, it's one for the ages.

I just wanna wake up, you know?