Fixed Income Morning Economic Report, 8-31-26

Good morning and happy Monday,

A quiet start to the week with the UK having a bank holiday, USTs are currently firmer by a tick at 108-04+, in 108-01 to 108-09 range; note, the initial low went below last week’s trough by half a tick, and any resumption of the move looks to 107-31+ from the last week of July. The main focus was the weekend’s geopolitical updates and particularly US action on Larak Island and then Iranian retaliation.

Geopolitics aside, for our neck of the woods focus remained on the speech by Fed Chair Warsh last week, which had a hawkish skew and has contributed to the implied probability of a September 25bps hike increasing to just under 60% and with SFRZ6 trading at 95.925 un 1,5 bp and having had a 85,89 to 95,935 range we are 74% chance of cumulatively more than 1 hike before the end of the year.

On the docket today; NOTHING SCHEDULED