The bond market is really going for it.
US 2-year yields are down 17 basis points to 4.20% and 10s are down 11 bps to 3.94%. The market is back to pricing in 147 bps of rate cuts this year from 130 bps earlier this week.
That's spilled over into a sharp drop in USD/JPY to 146.59 from 147.80 earlier.
The move kicked off on softer US wage data and a weaker ADP print. More recently, a regional PMI number was below expectations.
Still, these are outsized moves ahead of an FOMC decision.
Some eyes have turned to New York Community Bancorp, whose shares are down 39% after cutting the dividend by two-thirds. They acquired assets from failed Signature Bank last year and Flagstar Bank in 2022. The company said it's building up capital but there is some angst about community banks again and the KRE regional bank index is down 3.6%.
The market was quick to dismiss early problems as US regional banks last year and might be overreacting in the other direction this year but with banks you never really know how bad it is or what they're hiding. The problems of mark-to-market Treasury losses remain.
