Bonds were also under pressure as U.S. 10-year Treasury yields hovered around 5.0%, pushing borrowing costs up across the globe and testing equity valuations.
Indeed, futures imply around a 70% chance the Fed is done tightening for this cycle and are flirting with the chance of rate cuts from May next year. “I don’t think it’s a tipping point, but it’s a reminder of the record tightening we’ve had and it’s a reminder, as far as the Fed is concerned, that they can’t be entirely sure quite how much of that tightening so far has already been transmitted to the real economy and how much more is to come,” he said.
“At the same time, last quarter’s modest rise in hours worked points to a strong productivity gain and surge in corporate profits,” wrote JPMorgan chief economist Bruce Kasman in a note.