- Biggest daily decline for stock markets since October 10
- Fed's Musalem: Outside of data centers, business investment has been tepid
- U.S. Treasury sold 25 billion of 30 year bonds at a high yield of 4.694%
- EIA weekly US crude oil inventories +6413K vs +1960K expected
- BOE's Greene reappointed for second term
- Fed's Kashkari: Inflation is still too high, at 3%
- Hassett: Expect 1.5% lower GDP in Q4 because of the shutdown
- Fed's Hammack: We’ve got this persistent high inflation that is sticking around
- Fed's Daly: It's premature to say definitely cut or no cut in December
- More from Daly: I think risks are in balance, still slightly higher on employment
Markets:
- Gold down $23 to $4175
- WTI crude oil up 17-cents to $58.67
- US 10-year yields up 4.2 bps to 4.12%
- S&P 500 down 1.6%
- Bitcoin down 3.5% to $98,300
- GBP leads, NZD lags
Today's price action was tough to pin down. Fed pricing for a December cut fell to 50% from 66% earlier this week and that helps to explain some of the rout in equity markets but hardly all of it. More puzzling is what caused the sudden drop as we get the same usual rhetoric from the usual Fed voices.
In addition, that kind of a move should be USD positive when it was largely the opposite the unfolded as the euro, pound and yen made solid gains against the dollar. The pound in particularly was helped by falling UK budget angst.
Some pointed to an AI washout or China chip announcements but that's a tough sell as there was nothing revelatory. The overspend and overvaluation arguments are still there and they're somewhat compelling. Michael Burry threw in the towel yesterday and that's the kind of thing that often happens at the top, so that's something of a trigger but it would take a lot of people suddenly piling into that idea to get these kinds of moves.
The other curious thing was how limited the drop was. Equities took a brutal hit but he FX market was relatively calm and bonds sold off, which is the opposite of a flight to safety kind of day. That argues that nothing fundamentally changed but we will certainly be on edge Friday.
