Swaps Market Thinking the Fed Could Be Done In December

A tectonic shift in Fed expectations is behind the bond market selloff

Highlights

• A tectonic shift in Fed expectations is behind the bond market selloff

• Investors pick up the “Trump Trade” where they left off last week

• Speculative longs and complacent positioning define the market

• Price and lending data show China stimulus faltering

Key Takeaways

Investors Pick Up Where They Ended Last Week’s Market Action

• Markets start the week where they left off — equities are in rally mode (the S&P 500 looks set to close above the 6,000 mark) and bonds are extending their gains that began in the latter half of last week (core sovereign European yields down between -2 and -6 basis points but the U.S. Treasury market is closed for Veterans Day). The dollar is higher, weighing on commodities, but Bitcoin has advanced to new record highs just below the $82k mark.