S&P 500 holds near highs, but Fed cuts could spark short-term volatility before medium-term bullish momentum resumes.
The 10-year yield is trading near 4.059%, continuing a steep downward move after Powell made it clear the Fed’s main concern has shifted to the labor market.
Yields are forward-looking — they reflect where investors expect interest rates to go. A falling 10-year yield tells us markets are pricing in lower rates ahead, and that’s a direct signal of confidence in future Fed cuts.
Earlier this year, the Fed held off on cutting rates because yields stayed sticky despite softer inflation data. Cutting in that environment would’ve risked credibility. But now, with yields finally sliding alongside weaker labor data, the Fed has a safer opening to ease policy.
At 4.059%, Investors see the Fed finally having the green light to move, not just because inflation has cooled, but because cracks in the labor market make it urgent.
Bottom line — the bond market is telling us that easier policy is coming, and equities and metals are already feeding off that expectation.
S&P 500 holds near highs, but Fed cuts could spark short-term volatility before medium-term bullish momentum resumes.
DXY holds near support as traders await FOMC, with three cuts priced and data setting the next move.
Sterling stalls at resistance as soft UK growth data shifts attention to next week’s BoE meeting and balance sheet risks.
