November kicked off with a strong showing from buyers after October’s month-end session saw a fair amount of selling. But the gains didn’t last long. Manufacturing PMIs came in just slightly stronger than expected and JOLTS data was also “high enough.” This is not the lackluster economy that bond bulls were hoping for. Sellers quickly took bonds back to unchanged. Stocks also moved lower in perfect unison with bonds–something we frequently see when the market is adjusting its outlook for Fed policy.
Fed Funds Futures confirm that markets have completely priced out the “Fed Pivot” rally that started just over a week ago.
This is actually a good thing as it means hopes are hopefully not too high for Powell to deliver a dovish message tomorrow.