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Good morning. The US Treasury yield curve touches positive territory. Goldman warns of a stocks correction. And the race to save Thames Water. Here’s what people are talking about.
A key segment of the US Treasury yield curve briefly turned positive as weaker-than-anticipated labor-market data bolstered bets on steep interest-rate cuts by the Federal Reserve. Treasuries jumped on Wednesday — led by shorter-maturity notes that are more sensitive to monetary policy — after US job openings fell in July to the lowest since the start of 2021. The two-year Treasury note’s yield dipped below the 10-year’s for only the second time since 2022 as traders built up wagers on a super-sized rate reduction this month. Interest-rate swaps showed they have fully priced in a quarter-point rate cut at the policy meeting this month — and see a more than 30% chance of a half-point reduction. Oaktree Capital Management LP’s Howard Marks says US rates will settle in a range of between 3% and 4% after the Fed’s reductions. His comments come as economic activity was flat or declining across most regions in the US in recent weeks, according to the Fed’s Beige Book survey of regional contacts.
For Ye Xie’s analysis of the labor market, see below.