Big Fat Nothing Burger With a Side of Fed-Speak

The tedium that is the 2nd half of November continues to underwhelm. Specifically, we're in a lull between CPI 2 weeks ago and Nonfarm Payrolls next week.  These are the big data points that will offer clarity for the musings that are creating small-scale volatility in a narrow range.  What musings are those? Today's most significant example is a comment from Fed's Waller that can be distilled to a very simple concept: further disinflation = rate cuts. Despite the obvious nature of that comment, the bond market reacted with another push to the lowest yields in months, even if only barely.

Since that is actually a fairly small portion of today's overall movement, we can do more to confirm Fed-Speak as the inspiration by looking at the reaction in Fed Funds Futures (they should be generally calmer outside of moments when the Fed rate outlook is digesting new inputs).  They fill their role perfectly in this case with none of the AM volatility seen in Treasuries and just as obvious a move in response to Waller. 

Of course the caveat to all this is that it's a drop in the bigger-picture bucket.  Here's a longer-term view of the same Fed Funds Futures implied yield (bank failures are highlighted simply to preempt curiosity):

In addition to the Fed-speak, we could also consider another side item for today's nothing burger: new conforming loan limits. The underlying data for the calculation has been released even though FHFA has yet to officially announce it.  Barring surprises or a calculation error on our side, the number should be close to--if not exactly--$766,550.  This isn't a market mover as much as an annual milestone for the mortgage/housing market.