The Overnight RateBagehot was writing about a money market that would not run itself. Monday desk, and the household bills that follow a rate hike are still catching up on their own clocks.
- Bank of America prime has been 7.00% since Sept. 17 (Bank of America). Freddie Mac’s weekly 30-year is 7.03% as of Sept. 24, from 6.95% the week before and 6.30% a year ago (Freddie Mac). Mortgage News Daily’s daily index ended Friday at 7.43% (Mortgage News Daily). A weekly print at 7.25% or higher this year is 66% on Polymarket, from 57% Friday (Polymarket).
- Census put August durable goods orders virtually unchanged at about $338.6 billion, after a revised 0.9% July rise, against forecasts for a decline (Census via Haver, Trading Economics). University of Michigan’s final September sentiment printed 48.1, from a 47.8 preliminary and 51.7 in August, with year-ahead inflation expectations at 4.6% (University of Michigan).
- The S&P 500 closed Friday at 7,743.41, up 0.51% on the day. The Dow gained 0.93% to 51,828.62. Nasdaq added 0.48% to 27,068.72 (Yahoo Finance). The 10-year Treasury closed Friday at 5.17%, the 2-year at 4.81% (Treasury).
What changed in your bills
Prime moved with the Fed on Sept. 17. Most variable-rate cards and home equity lines are written as prime plus a margin. The index is 7.00%. The APR on an existing account usually waits for the lender’s billing cycle, lookback, or first-of-month print. Some September statements already show it. Others are still a cycle away. The Fed’s G.19 still publishes no current card rate, so this desk is not inventing one.
SOFR, the overnight secured rate, printed 3.88% on Thursday (FRED). Regular gas is $4.4768 and diesel $6.4531 this morning (AAA). Both are a few cents under Sunday and well off diesel’s $6.5276 record from Sept. 22. ICE BofA US investment-grade OAS was 0.79 percentage points on Thursday. High-yield OAS was 2.80 (FRED).
Threshold: Wednesday 8:30, and noon Thursday
BEA publishes August personal income and outlays, including the PCE price index, Wednesday at 8:30. July’s headline PCE was 3.7% year over year and 0.2% month over month. Core, excluding food and energy, was 3.3% and 0.2% (BEA). Trading Economics has August core consensus near 0.3% month over month and 3.4% year over year (Trading Economics). News either way: a core month-over-month print at or above 0.4%, or a soft print at or under 0.1%, while an October hike sits at 67% on Kalshi this morning (Kalshi).
Freddie Mac’s next weekly 30-year average prints Thursday at noon from 7.03%. Dallas Fed manufacturing for September lands this afternoon at 2:30. Prior was 11.6 (Trading Economics).
Who pays: the billing cycle
A quarter-point hike takes effect at the Fed on decision day. It reaches bank prime overnight. It reaches a household’s card or HELOC on the next statement date.
On a $50,000 HELOC at prime plus 1, the step from 7.75% to 8.00% is $125 a year in interest. A revolving card balance sees a similar fraction when its cycle flips. Small per account. Two or more Fed hikes this year are 94% on Polymarket (one 9%, two 52%, three 41%, four 1%), from 92% Friday (Polymarket).
The household carrying a prime-linked balance after the billing cycle flips pays. The lender’s net interest margin collects. The mechanism is a calendar.
Net net: the Fed moved eleven days ago. The statement that shows it is still in the mail for most accounts.
Headlines
- Iran-Oman Hormuz shipping deal by Oct 31 fell to 26% on Polymarket, from 34% Friday (Polymarket). The Sept. 30 contract is at 3% with two days left. Diesel is off its record and still above $6.45 (AAA).
- Clarity Act becoming law this year: 6% on Polymarket (Polymarket). Recession by year-end: 9% (Polymarket). Overnight futures tape was unavailable this morning (rate limit).
Cash markets reopen against Friday’s closes. The bills are still on the statement calendar.