‘Absolutely’ not buying [Video]

US yields rebounded and major indices sold off yesterday as markets have priced in a beyond-reasonable amount of rate cuts from the Federal Reserve (Fed) for next year based on a soft-landing scenario. All eyes are on the US jobs data for some comfort… that may or may not come. Either soft data will cement the Fed rate cut bets or robust data will inject uncertainty and volatility to the market. In this context, the JOLTS data is expected to show lesser job additions in the US in October. But note that the US jobs market was impacted by strikes last month, last month’s negative impact could turn out to be positive for this month, and the latter could eventually blur the visibility of the health of the US jobs market. Presently, the markets price in around 125bp cut from the Fed next year, that’s obviously significantly lower than where the Fed sees its rate by the end of next year.

The US 2-year yield jumped to 4.66% level as the 10-year yield rebounded to 4.30% yesterday, the US dollar jumped past its 200-DMA, and gold got hit by a more than $100 selloff after trading at an ATH on Monday’s open. The selloff in crude oil continues. The barrel of US crude just slipped below the $73pb level this morning, as oil bears totally ignored the Saudi Energy Minister Abdulaziz bin Salman’s warning that production cuts can ‘absolutely’ continue past Q1 if needed.