It’s Thanksgiving week where many of us will get ready for family members will converge under one roof… This year, that roof will be mine… Some may come packing rolls and green bean casserole… others will come packing fridge opinions, poorly timed critiques, and unfilled thoughts… but hey, what’s a family Thanksgiving without a little drama… and I don’t know about you, but I personally look forward to Uncle Joe telling the same story over and over about how kids these days are too soft and back then, he used to wrestle bears for lunch money and still make it to school before the bell rang.
Currently, the market feels much like a family table right now… Everyone showing up with their own dish of opinions. Some bring optimism, other skepticism… Certain figures (rhymes with Powell) seem to come ready to just stir the pot. Coming back from last week’s reversal, driven by the mixed bag of data points from the jobs number, we seem to have caught a bit of a bid. 10yr is currently trading at 4.05% (hitting resistance at 4.04%). With plenty of uncertainty and conflicting viewpoints given the array of Fed speak, today we are left with a 71% chance of a cut in December.
There are only a few relevant data points we’ll receive in the coming weeks before the FOMC meeting. One comes tomorrow in the form of Retail Sales, which isn’t expected to show any weakness in the consumer. Keep in mind, this is September’s data, much like the jobs report, so it could be considered old news. That said, if we get a weaker number, it would likely still be a tradable event. One can’t help but contemplate what would be required to make another run at the 4.0% level. My take is that we’d need further deterioration in economic confidence to warrant such a breakout.
As we prep for a week of casseroles, critiques, and Uncle Joe’s bear wrestling tales, we are reminded the market are doing the same. With an array of ingredients and flavors (some saltier than others), the building narrative comes back to whether Powell brings out his turkey carver to cut rates or leaves his knife in the drawer…
Wishing everyone a happy and blessed Thanksgiving! I am very grateful to be sitting around the family table with all of you.