The bond market has been eager to price in a recession and Fed pivot but today's forward-looking PMI data call that into question. The services number in the S&P Global survey was particularly strong, rising to 53.8 from 50.6 with new orders up by the most since September.
That's sapped some of the bravado from the bond market as US 2-year yields are up to 3.71% from a low today of 3.55%. In any case, it's still far above the Fed consensus dot at 5.00-5.25% in December.
What I'm wondering about today is: What happens to markets if the bank issues get sorted in short order? That would cause some real pain in bonds, once again but it's more-nuanced for stocks.
Overall, though, it's getting harder to see it fading away smoothly. Worries have shifted to commercial real estate and office buildings in particular. There's a secular problem there now with work-from-home and banks aren't going to be eager to offer loans.
