The S&P 500 has extended its gain to 1.0% on the day on a renewed bid in Treasuries. US 10-year yields are now down 13.7 bps on the day to 4.46%, not far from the lows of the day.
The market is increasingly leaning towards peak Fed fund and the rising possibility of rate cuts. Out the curve, December Fed funds are pricing in 84 bps of cuts, which is a big step up from 59 bps two weeks ago.This is the third day of big gains in a row in a move that started after non-farm payrolls in a big reversal that went against conventional thinking. That turn is reminiscent of last October when markets reversed despite a high CPI report.
