Happy Thanksgiving to all our friends and family!

The 10Y broke back into the channel it broke out of several weeks ago, primarily on the enthusiasm around the treasury secretary designate – a hedge fund manager – will keep the plates spinning for another 4 years.

Whether or not he will is another matter. But, for now, the algos believe it and the 10Y is back below 4.3% and VIX has extended its plunge to 22% in the past three sessions – sending futures soaring.

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Despite plenty of bombshell news, ES has spent an entire week wedged in between its 10- and 20-day moving averages.

With the USD spiking higher and VIX getting the bounce we anticipated, can it break back above its IH&S target?

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At 213K, initial claims came in slightly below both the prior print and expectations. Futures rose slightly on the news, adding to their overnight meltup.

But, the more important print seems to be that of NVDA, which has again pushed above its Jun 2024 highs.

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Futures are up slightly following yesterday’s selloff algofest which celebrated increased risk of nuclear weapons being used in Europe.

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After Ukraine fired a longer-range ATACMS missile into Russia for the first time, Russia amended its nuclear doctrine to consider aggression from a non-nuclear state with the participation of a nuclear country to be a joint attack on Russia.

The futures market quickly sold off by about 1% before algos kicked in to limit the damage.

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Futures are up very slightly after a week that saw prices begin to slump right on cue.

Unfortunately for bulls, the slump is not over.

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The past two days of inflation data make it abundantly clear that inflation’s slump is slumping. But, don’t take our word for it. Just ask the bond market, where the 10Y has soared from 3.6% to 4.5% in less than two months.

Headline CPI, which had dipped as low as 2.44% in September, jumped to 2.60% in October.  And, the components of the print were problematic. Energy is in the final stages of its YoY decline and, in the absence of peace breaking out in the Middle East, will soon show YoY gains. Shelter, at nearly 5% YoY, remains quite sticky and unlikely to trend lower unless we enter a full blown recession.

And, this morning’s PPI print reminds us that neither goods nor services are trending lower.With nearly every economist on the planet agreeing that Trump’s tariffs will stoke further inflation, what does this mean for the economy and the markets?

NOTE: Powell will speak on “Global Perspectives” at 3pm ET.  Catch it HERE.

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Headline CPI rose 0.2% for the fourth straight month in October. Year-over-year, however, it increased by 2.6% versus 2.4% in September. This was in line our with expectations and increases the odds of the pause we’ve forecast for December’s meeting.

Core CPI’s 3.3% increase (0.3% MoM) further reinforced the market’s concern regarding the inflationary effects of the incoming administration’s plans to enact sweeping tariffs on imported goods.

Futures are slightly higher as yields however around important levels of resistance.

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Futures are off slightly on the eve of another important CPI print.

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