Stock Market Update

[BRIEFING.COM] The major indices are clinging tightly to modest gains, although the Russell 2000 has lost some of its grip on earlier gains. It had been up 1.0%, but it is now up just 0.3%.

That move has coincided with the 10-yr note yield climbing to its highs for the session (4.46%) after hitting 4.36% in the immediate wake of the October Consumer Price Index that was released at 8:30 a.m. ET.

The action in the Treasury market today can be characterized as a curve-steepening trade. The 2-yr note, content to think the Fed is still on track for a December rate cut, even though core-CPI was up 3.3% year-over-year, is down four basis points to 4.28%, leaving the 2s10s spread at 18 basis points versus nine basis points yesterday.

In related news, the probability of a 25-basis points rate cut at the December FOMC meeting is at 82.3% today versus 58.7% yesterday, according to the CME FedWatch Tool.

St. Louis Fed President Musalem (2025 FOMC voter) said a short time ago that, "Further easing toward a neutral policy stance will be appropriate to support employment if inflation continues to converge toward 2%. Shifting from my baseline to alternative scenarios, recent information suggests to me that the risk of inflation ceasing to converge toward 2%, or moving higher, has risen, while the risk of an unwelcome deterioration in the labor market has remained unchanged or possibly fallen."