Rates as of 0500 GMT

Market Recap

Volatility remains the name of the game. The NASDAQ index for example was up 1.6 at one point yesterday, then down 2.1, then closed more or less unchanged 0.06. Similar movement for the SP 500 at its lows it was just shy of a 20 decline from its recent record high, which wouldve marked the formal start of an official bear market.

Similarly with the ultimate speculative vehicle, Bitcoin. After being down 10.1 on the day at one point it bounced back by some 5,000 or 20. At the time of writing its trading up 7 from Wednesdays close.

I cant speak to why Bitcoin is falling except of course its 70 correlation with the SP 500 nowadays but stocks are falling on growth fears. The markets are getting concerned about the prospects for growth. You can see that in the performance of long bond yields, which have been coming down over the last few days.

After weeks and weeks of revising up estimates of the Feds likely hiking path, the market once again revised down its estimates yesterday.

The change in rate expectations over the last week has been quite dramatic. The market is still far above the FOMCs estimates for the end of this year, but now pretty much in line with official thinking for 2023 and 2024. That is, they think the Fed will have to tighten by more than planned this year but thats likely to slow the economy enough to meet their goals for 2023 and 2024 probably by throwing the US economy into recession.

The change…