GOOD MORNING! After taking a brief break from rallying on Monday, the Treasury market returned to rally mode on Tuesday. Treasury prices had firmed up overnight on risk-off sentiment, disappointing European economic data and responding to global markets, which spurred bets on the European Central Bank (ECB) pivoting to easing rather than tightening. The Treasury market got a tailwind with the print of the Job Openings and Layoff Turnover Survey. The JOLTS report showed that job openings fell more than expected and from lower revised figures. With inflation receding and the labor market less tight, traders and investors added to their bets on a Fed pivot and steep rate cuts. At the end of the day there was even a one-in-one hundred chance the Fed would cut rates at next week’s meeting. That’s not likely as the service sector PMIs from S&P Global and the Institute for Supply Management (ISM) indicated that service sector activity was still expanding. Falling market rates supported stock to narrow and offset early morning losses.

     The markets are exhibiting a slight risk-on sentiment with US stock index futures contracts and Treasury yields up slightly. The markets seem pretty confident that the Bank of Canada, meeting today, will wax dovish and the labor market data due out the rest of the week will fit with central banks around the word are turning dovish and will be easing rates sooner rather than later narrative. One should be cautious and aware of Bob Farrell’s 10 rules of investing (attached) rule #9- When all the experts and forecasts agree, something else is going to happen. This morning’s labor-related releases are the November ADP Private Employment Change Report and revised 3rd quarter non-farm productivity and unit labor costs. Also being released this morning are the latest weekly MBA mortgage application data and October’s trade balance.