It was a short week; short on days, short on volume but not short on fodder for the ongoing rate debate.
Credit markets clocked a round trip, with the 10-year starting and ending the week above a 1.6 percent yield, ending at a multimonth high of 1.65 percent, having made a pit stop at 1.52 percent along the way. Equities were fairly stagnant until Friday, uncertain after seven years of monetary-infused expansion as to whether bad news is good news or good news is bad news, or if it is even worthwhile to figure it out since the machines account for 70 percent of trading volume.
The most notable economic news event was the weak ISM Non-Mfg report on Tuesday, which followed the weak ISM Mfg release on September 1. These overshadowed the otherwise arguably positive economic releases, including one of Janet Yellen's allegedly favorite indicators, the JOLTS report. In what one would have expected to be particularly market-moving negative news but was only of slight impact, there was Mario Draghi's message that further ECB stimulus is on hold. And to show that everything old is, well, just old, Apple's new iPhone launch underperformed low expectations, likely only exciting the same crowd who will be lining up for Sulu's autograph at the next "Star Trek" convention.
But just when the week was drawing to a close, Boston Fed President Eric Rosengren's hawkish comments were laid out like bread crumbs, leading markets down the path to a September rate hike. In response, equities dropped in excess of 2 percent, yields spiked globally (10-year bunds briefly traded out of negative territory) and complacency took an early holiday.