(Corrects second paragraph to say more than a 50% chance of a half point cut, not 80%)
A look at the day ahead in U.S. and global markets from Mike Dolan
The unexpected downturn in U.S. household confidence this month and growing anxiety about jobs has spurred aggressive interest rate cut bets anew – dragging Treasury yields, the dollar and stock futures lower into Wednesday’s open.
Feeding mostly off the employment signals in Tuesday’s consumer survey, rate futures now price some 40 basis points off Federal Reserve rates at its next meeting – just days after November’s election. That now puts the chances of a half point cut rather than a quarter point move at more than 50%.
After a decent auction of new paper late yesterday, two-year Treasury yields are within a whisker of 3.5% for the first time in two years. A ‘bull steepening’ of the 2-10 year yield curve – which sees two-year yields drop more than falling 10-year yields – pushed…
