At-a-Glance
Key Takeaways with Craig
US Equity prices traded lower today as yields continued to rise, as the market weighs the possibility of rate cuts this year. And speaking of the possibility of rate cuts this year, CME’s FedWatch tool now shows the probability of no change to the Fed Funds target rate at the March meeting at about 41%; up from 35% yesterday and 30% a month ago.
Treasury yields at the short end of the curve rose more than at the longer with the Micro 2-Year Yield future up by another 11 basis points and the Micro 10-Year higher by about 3.5 bps. The 2-Year is now up by over 21 basis points just in the last two trading sessions, though remains well below the 6-month average, as depicted in the top graph below, taken from CME’s CurveWatch tool. In CME’s Treasury options markets, CVOL has generally declined since the beginning of the year as you can see in the bottom CVOL graph below (orange line = 2-Year; blue line = 10-Year).
As we move through the last couple days of the week, the market will continue to watch fourth quarter earnings reports along with speeches from several Federal Reserve officials.
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