Nothing has changed from the mid-day update, so today’s recap will largely be an amplification of those themes.
Bond markets were stronger overnight. This largely looks to be due to the fact that they were weaker in the previous overnight session. In both cases, European bond markets led the charge, ostensibly over speculation about tomorrow morning’s ECB Announcement. In both cases, the overnight momentum carried through to at least 10am Eastern Time and leveled off after that.
Today’s rendition of that ‘leveling-off’ was friendlier than yesterday’s as bonds continued to make minor improvements into the noon hour. On the other hand, we might have expected more improvement given the fact that stocks had one of their worst days of the month with the SP falling back below the important 2023 level. The unwillingness of bonds to follow the stock rally was especially evident in the afternoon.
The takeaway is that there’s a certain measure of anxiety about upcoming events–be they the ECB announcement tomorrow or the Fed Announcement next week. Traders are also considering their bigger-picture strategies heading into the end of the year (at the end of next week, there are only 2 calendar months left!).