Treasury yields fell, but more at the long end of maturities than the short end, which deepened the inverted yield curve, a market indicator of a looming recession. The gap between yields on two- and 10-year notes was -83.7 basis points.
“During recessions, markets on average price at a discount to fair value, which they have not yet done,” Pride said. “There is not a single instance in which a market has bottomed before the recession started.” Futures show the market expects the Fed’s peak terminal rate to rise to 4.974 percent next May, but by December 2023 to have fallen to 4.534 percent on speculation the Fed will cut rates to help the economy rebound from an expected slowdown.
“We’re in the minority in terms of our forecast because a lot of the colleagues we’ve been speaking to are much more pessimistic,” he said.Among the biggest drags on the benchmark S&P 500 index was Meta Platforms Inc after European Union regulators ruled its Facebook and Instagram units should not require users to agree to personalized ads based on their digital activity.The Dow Jones Industrial Average fell 1.03 percent, the S&P 500 slid 1.