Economic data is weak, and expectations for rate hikes are falling🥹
The economic data suddenly weakened and contradicted the 5.8% GDP growth predicted by the Atlanta Fed GDPNow model. The interest rate market adjusted, with the 2-year yield falling by 16 basis points, while the 2/10s yield curve steepened by 7 basis points. The market expected the probability of a rate hike in November to fall from a high of 47% to 30%. There was a large amount of short-covering transactions in the market, and the 7-year bond auction was squeezed sharply. The yield of this auction was 4.212%, 2 basis points lower than expected, with a total bid of US$95.9 billion and a bid-to-cover ratio of 2.66 times, the highest level since January.
