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from Counterparties:

MORNING BID – Just our imagination

Something has changed in the bond market in some ways - but it's a bit difficult to tease out when you're talking about yields still near very low levels. But there's a sense that the San Francisco Fed's paper on the way in which economists are underestimating the Fed's own view of interest rates is a game-changer, or maybe it's just that people are waking up to the idea that the Fed really does have to raise rates eventually, or even more so, that it's an overreaction to a previous overreaction: backlash to the idea that the August jobs report was so lousy that the Fed was still firmly in "not doing anything ever" mode.

The dynamics of the long-dated market haven’t been altered all that much just yet – or rather, it’s a bit early to declare that. The 10-year is still hovering around 2.50 percent, and the spread between that and 10-year Treasury Inflation Protected Securities stands at about 2.11 percent, and it’s remained in a steady range for the last year-plus as well, actually trending lower in the last few months.

That may in some ways be a product of the expectation that the Fed is preparing to get moving on maybe changing its language related to keeping rates low for a “considerable period” of time at its September meeting next week. Given, again, that short positions have been substantially worked off in recent weeks, the bond market no longer has the same kind of knee-jerk reaction to rally drastically in the face of evidence saying the Fed is going to keep rates low.

The weak jobs report has kept the consensus pretty much intact – that the Fed is going to make a move at some point, and so the bull case for bonds loses a bit of its luster (if only a little) IFR notes that lots of corporate debt offerings and the reduced short base contribute mightily to this, but the action in two-year and three-year notes, where yields are closing at highest levels since 2011, does give weight to the idea that markets are ready to start shifting yields higher.

from Mark Jones:

Obama needs to explain exit strategy for Islamic State fight http://t.co/PBxIVZ61Fw

Obama needs to explain exit strategy for Islamic State fight http://t.co/PBxIVZ61Fw

from Mark Jones:

Scotland can expect one heckuva hangover after independence vote http://t.co/SO8IAH7DHw

Scotland can expect one heckuva hangover after independence vote http://t.co/SO8IAH7DHw

from India Insight:

Sketchy Details

Visarjan Playlist
(Disclaimer: This cartoon does not mean to mock religious sensibilities; it questions the use of Bollywood dance numbers during a religious festival)

(Any opinions expressed here are those of the author and not of Thomson Reuters)

from MacroScope:

An almighty gamble

Britain's Prime Minister David Cameron leaves Downing Street in London

Having woken up to the very real possibility of Scotland going it alone, the leaders of Britain’s main parties have scrapped their parliamentary business and headed north to campaign in what amounts to a huge gamble.

The “No” campaign has been criticized for many things – being too negative (though no is negative by definition), being too aloof, failing to address the hole’s in Alex Salmond’s manifesto. The question is whether it is too late to do anything about it. It is risky to deploy Prime Minister David Cameron who, by his own admission, is not catnip to the Scots.

from Mark Jones:

An almighty gamble http://t.co/8hZlEYc9hr

An almighty gamble http://t.co/8hZlEYc9hr

from Breakingviews:

Rakuten’s $1bln U.S. buy stretches loyalty logic

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Rakuten’s latest acquisition stretches loyalty logic. Buying U.S. cash back site Ebates for $1 billion will help Japan’s largest e-commerce group beef up abroad. It also underscores Rakuten’s determination to use loyalty schemes to distinguish itself from rivals like eBay and China’s Alibaba. Yet, as with Rakuten’s other recent chunky deals, it’s unclear how all the parts fit together.

from The Great Debate:

If U.S. joins Islamic State fight, how will it get out?

U.S. President Barack Obama delivers a statement from Martha's Vineyard, Massachusetts

When President Barack Obama makes the case for military action against Islamic State militants on Wednesday night, it won't be hard to convince Americans to get involved in the conflict. The hard part will be explaining how we get out.

The president is speaking to the American people -- not to Congress. He may not even ask Congress to authorize the use of force. Just to fund it. Which they will do because they don’t want to undercut the U.S. military.

from The Great Debate:

Scotland can expect one heckuva hangover after independence vote – yes or no

RTR44CO3.jpg

Scotland will soon be suffering from a monumental hangover. There will be a lot of hurt heads, a lot of tears and, without a doubt, an immense amount of anger that will last who knows how long -- weeks, months, maybe even years -- if Alex Salmond’s dream of independence comes true.

The Sept. 18 referendum on independence is quite unlike any other United Kingdom election I have witnessed. It is much more visceral, with so many complicated currents swirling beneath one simple question: Is Scotland in Britain or out of it? There are a lot of people going with their gut instinct, and you sense that if the outcome goes against them, the simmering rage will finally bubble over.

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