Global Macro Outlook, October 5–11: A vacuum in macro data, rate cuts delayed, and bond markets holding firm! From cooling U.S. employment to a global sovereign debt stress test!

Last week, the Fed Vice Chair and the New York Fed President weighed in. The downward revision to PCE and cooling nonfarm payrolls, among other factors, caused the probability of a second rate hike in October to drop sharply.

The market’s central question has shifted from whether the Fed will raise rates in October to this: if the Fed pauses rate hikes, why are global long-term bond yields still not coming down?

The first key theme—October’s second rate hike derailed by PCE and nonfarm payrolls: #美联储10月加息概率降至17%

Last week, August PCE was revised down and nonfarm payrolls came in far below expectations. These two data points narrowed the Fed’s room to raise rates, lowering the probability of an October hike to 18.3%.