OIL: New US sanctions on Iran’s oil a Blow to China's Sinopec: Reuters

• FRBNY EFFR for prior session:
  • Daily Effective Fed Funds Rate: 4.33% (+0.00), volume: $112B
  • Daily Overnight Bank Funding Rate: 4.33% (+0.00), volume: $208B
• Earlier Repo Reference Rates
  • Secured Overnight Financing Rate (SOFR): 4.40% (+0.00), volume: $2.863T
  • Broad General Collateral Rate (BGCR): 4.38% (-0.01), volume: $1.143T
  • Tri-Party General Collateral Rate (TCR): 4.38% (-0.01), volume: $1.114T
  • (rate, volume levels reflect prior session)

• -15,000 SFRU5 95.9725, post time bid at 0844:21ET

Dovish repricing in the U.S. front end in the wake of the inline to softer-than-expected PPI release.

• FOMC-dated OIS now shoes 27.5bp of easing for this month (~10% odds of a 50bp cut), with a cumulative 46.5bp showing through October and 68.5bp of easing priced through December.
• Contracts 0.5-1.5bp more dovish vs. pre-data levels.
• SOFR-implied terminal rate pricing 2.88% vs. 2.93% heading into the data and post data extremes of 2.855%.
• Our macro team notes that the short answer for why PPI was so much softer than expected in August was the final demand trade services category, which as we noted in our preview is extremely volatile and prone to revisions.
• It's also why "core" PPI - which excludes trade as well as food/energy - was in line with expectations at +0.3% M/M. More to come shortly, but from the report, basically the categories that jumped in July causing so much concern reversed in August.