The market is trading in a very tight range ahead of tomorrow’s Federal Reserve confab in Jackson Hole Wyoming where Chairman Powell will give a much-anticipated address.

He is in a real tight spot after several policy mistakes, communication errors and inability to influence his colleagues.  On that note Fed, officials talking today, including rate-cut dissenter Esther George, are still reluctant to provide accommodation.

Those comments pushed yields, resulting in another temporary inversion of two- and ten-year treasuries. 

The market is on edge and needs a jolt of confidence from the Federal Reserve.  There are several reasons to cut rates that have nothing to do with the strength of consumers and I’m worried George and others will wait for signs that read like rearview mirrors: object is a lot closer than it appears.

Manufacturing

The flash manufacturing report from HIS Markit today revealed the first contraction in a decade (September 2009).   In addition to headline read of 49.9, there were other red flags.

• New Orders saw its largest monthly drop since October 2009
• Export sales swooned at the faster pace since August 2009
• Employment tumbled to weakest level since Feb 2010

IHS Manufacturing

The market wants to go higher but continues to run into a buzz saw at key resistance points.  It needs a catalyst and looking for Powell to come through tomorrow.