Page 4 - Fed Pivot News Today

The SPY raked in nearly $21 billion on Friday as investors continue to hop into the massive stock rally.

Some investors, however, believe much of the dovish shift from the Fed may already be reflected in Treasury prices. Deeper cuts, they say, would be more likely if a rapidly slowing economy forced the Fed to accelerate its easing - an outcome that would run counter to the "soft landing" outlook that has buoyed stocks in recent months.

November's CPI rose 3.1% year over year, down from the prior month's 3.2% rate and in line with expectations.

"After all the hopes and chatter around near-term rate cuts, today's CPI report is a little bit of a mood dampener."

"The more markets diverge from the Fed's signals, the more likely they are to push the central bank to adopt the path that is detrimental to them."

The 10-year rate could fall as low as 2.25% next year, according to Bank of America, down from about 4.12% now.

Stocks fell, though bond yields were also lower on Tuesday as investors continue to eye rate cuts on the horizon from the Fed.

Markets shouldn't rally as much as they are if they're pricing in recession-level Fed cuts, Mohamed El-Erian told CNBC.

Two to three Fed rate cuts should occur next year, likely starting in July, though the market is expecting them to begin earlier, UBS said.

The November NBS Manufacturing PMI for China has remained a contractionary state; it declined to 49.4 from 49.5 in October and below the consensus estimate of 49.7. This observation suggests a weak external demand environment coupled with the ongoing dismantling of global manufacturing supply chains especially in the semiconductor industry due to the rivalry between the US and China in the high-tech Internet of Things space.