In fact, to observe the financial market's pricing of future interest rate expectations, one still needs to look at the U.S. Treasury yield trends, referencing the 1-hour level. At the U.S. stock market open, the 2Y and 10Y yields tend to flatten.
This means that the short-term pricing expectation for a 50BP rate hike in December or consecutive hikes in January 2027 has been initially completed, and the U.S. stock index also rose pre-market.
Simultaneously, the VIX index declined, indicating reduced volatility risk, and the SPHB/SPHQ indices rebounded pre-market, showing increased risk appetite.
Going forward, unless macro data supports the necessity for more rate hikes, Fed officials express more hawkish views, or Brent crude returns above $95, the market's negative pricing for December rate tightening is basically temporarily over! Regarding bond yields, during tonight's U.S. session, watch whether the 2Y and 10Y yields continue to rise!
Be cautious of this Friday's PPI data; if producer inflation also rises sharply, it can basically be expected that October's PCE will also increase. These factors will raise the probability of a 50BP hike in December or consecutive hikes in January! #非农与CPI均超预期，美联储12月加息或提速
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