TL;DR
Long the hike story, December at 94% and no cut anywhere on the strip; softer PCE didn't dent it.
Three-plus hikes still look stretched, but my tell at 32 on 2s10s is challenged with the curve at 37bp; one more session to defend it.
Rate vol is the live tail, MOVE at 110 in its stressed band while VIX sits calm at 16.3.
Credit is my anchor, IG at 84bp is mid-range; invalidation stays 90bp.
Watching payrolls tomorrow as the decider on whether the long-end rout drags equities.
Where We Stand
Yesterday I said I was long the hike story, December fully priced with no cut on the strip, and core PCE was the test. The print came in at 0.2% against 0.3% consensus, softer, and the tape backs me up anyway: the initial dovish reaction faded and yields kept climbing, the 10Y up 2bp on the day and 30bp on the week. So I'm not changing my read. My oldest open thesis, IG credit at 77bp signalling no stress, is intact with the series at 84bp, still below the 89bp mean and inside its middle band. The three-plus-hikes thesis is the one under pressure. My invalidation was 32 on 2s10s and the curve now sits at 37bp. I'm defending it for one more session, because this is bear steepening led by the long end; bear flattening is what would actually confirm the market believes in that many hikes.
