The Ghosts of Crises Past to Haunt the Midterms

Key arguments

• FOMC held the upper bound at 4.0% after September's hike, with Chair Warsh planning one strategy-only meeting per year.
• Headline and core PCE matched consensus, but the last two prints were hotter after a cool summer.
• A December hike is treated as near-certain absent a significant data shift or substantial financial tightening.
• Natixis turned neutral on the long end earlier this month and sees the structural rise in real yields as likely complete; it retains a long 2-year view from ~4.88% with a lower stop.

Corresponding source evidence

1. +1 929 688 6923 selin.aker@natixis.com Discover more on our Website The Ghosts of Crises Past to Haunt the Midterms “By the pricking of my thumbs, Something wicked this way comes.” -William Shakespeare (Macbeth) ► Inits October meeting, the Federal Open Market Committee (FOMC) held its policy rate unchanged at an upper bound of 4.0%.
2. Headline PCE inflation rose 0.5% m/m and 3.6% y/y, while Core PCE inflation rose 0.3% m/m and 3.1% y/y, in line with expectations.
3. We also continue to hold to our long recommendation in 2yrs from ~4.88% but trail our stop lower.