Higher than expected labor costs and the corresponding tumble in productivity prompted combination of recession fears and inflation anxiety with the market pricing in more tightening in the short-term and then more easing after the recession hits...
Source: Bloomberg
Notably the Q1 rate-cut expectations are fading, notably almost back to zero probability of the cut...
Stocks did not like that and long-duration Nasdaq stocks sank notably with Small Caps worst on the day. The Dow was the least ugly horse
Treasuries were all sold today, reversing Monday's gains with both 10Y and 30Y remaining lower in yield on the week. Today saw the short-end underperform (2Y +7bps, 30Y +2bps)...
Notably all yields are still higher from Friday's payrolls print.
The yield curve flattened significantly with 2s10s trading as inverted as -49bps....
The dollar ended unchanged after some early weakness (testing down to pre-payrolls levels) was reversed...
Crypto slipped lower on the day with bitcoin testing down to $23k...
Gold pushed back above $1800 today...
Oil ended very marginally lower after testing above $92...
Finally, US retail pump prices fell to 5 month lows...
And while President Biden's approval rating has bounced, it remains notably divergent from gas prices.
