GOOD MORNING!    The markets were quick to jump on the Fed is done rate hiking band wagon after CPI came in broadly in line with expectations and initial jobless claims were slightly higher than expected.  The market trimmed the odds of Fed raising rates at the September 19 – 20 FOMC meeting to 1 in 10.  The bullish sentiment, however, along with prices began to fade in the afternoon.  The one Fed speaker, San Francisco President Mary Daly, said that there was more work to be done, but hedged herself on the path of rates.  The 30-year T-bond auction was characterized as soft, which put some pressure on market rates.

     Quietly reported yesterday was the federal deficit for July was $221 billion and the total year-to-date was 1.68 trillion as compared to $725.7 billion year-to-date a year ago.  The Treasury announced that Monday’s 3- and 6-month T-bill auctions have been upsized by $2 billion each to $69 billion and $62 billion, respectively.  This comes as the market is still trying to digest the upsized auctions this week.  In spite that there is more upsizing to come, the Treasury curve is mixed and steeper in early morning trade with yields on the short-to-intermediate maturities down slightly and the long bond yields up slightly.  US stock index futures are narrowly mixed while most global equity bourses are ending the week in the red.  Today’s economic calendar includes July’s PPI and the preliminary August University of Michigan Consumer Sentiment Index.  Expectations on the Producer Price Index are for the monthly increases for headline and core readings to be up by 0.2%, causing the year-over-year rates to slip a tick to 2.3% and 2.5%, respectively.  With the economic surprise index and stocks moving down in the first part of this month, consumer optimism may have taken a step back.