MBS prices are down about 3/32 this morning while the DOW is up about 30 points as investors brace for the Federal Reserve’s long-awaited policy decision, with the market still divided on the size of the expected rate cut. Investors are still guessing at whether hopes for a 0.5% cut will be fulfilled or the historic pattern of 0.25% moves will repeat itself. In recent days, traders have stepped up bets on a bigger cut even after Fed officials earlier in September flagged they were more likely to trim the benchmark rate by 25 basis points. As of Wednesday morning, fed funds futures were pricing in a better than 60% chance the Fed goes large, up from just 15% odds a week ago.

MBS prices are down about 2/32 this morning while the DOW is down about 80 points as investors assessed fresh retail sales data as we wait for a Federal Reserve meeting pivotal to an interest rate cut. Total retail sales increased 0.1% month-over-month in August (Briefing.com consensus -0.2%) following an upwardly revised 1.1% (from 1.0%) in July. The key takeaway from the report is that control group sales — the component that factors into GDP — were up a sturdy 0.3% following an upwardly revised 0.4% increase (from 0.3%) in July and 0.9% increase in June. There is no hard landing in those numbers.

MBS prices are up about 2/32 this morning while the DOW is up about 125 points but tech stocks are struggling ahead of a crucial week dominated by expectations for the Federal Reserve’s first interest rate cut in four years. More broadly, stocks are diverging amid rising bets that the Fed will opt for a more drastic 50 basis point cut in its monetary policy decision on Wednesday at the end of its two-day meeting. The central bank is almost universally expected to bring in the first US rate cut in four years — a significant policy shift and an official end to a years-long tightening campaign designed to tamp down inflation. That conviction has put investors on edge over how aggressively the Fed will lower rates, whether by 0.5% or 0.25%.

MBS prices are up about 2/32 this morning while the DOW is up about 300 points as the market warms once again to the likelihood of a half-point rate cut by the Fed after virtually writing off the chances of a big pivot in light of recent inflation and jobs data. Traders are now pricing in a 49% chance of a 50 basis point move next week, compared with 15% at one point on Thursday.

MBS prices are down about 5/32 this morning while the DOW is up about 40 points as investors digested fresh inflation and labor data testing high-running expectations for a quarter-point interest-rate cut next week. Initial jobless claims for the week ending September 7 increased by 2,000 to 230,000 (Briefing.com consensus 229,000). Continuing jobless claims for the week ending August 31 increased by 5,000 to 1.850 million. The key takeaway from the report is that initial jobless claims remained fairly steady, underscoring the point that the labor market isn’t suffering a material and rapid erosion that would challenge the soft landing view.