Yields decline after Waller, Daly offer dovish comments. Market-implied odds of a December rate cut rose to ~77% today after Fed Governor Waller and San Francisco Fed President Daly signaled support for a move. The 2-year yield closed 1bp lower at 3.50% and the 10-year yield closed 4 bps lower at 4.02%. Meanwhile, equities rallied on the rate cut optimism, with the NASDAQ up 2.69%, its strongest session since May, and the S&P 500 closing 1.55% higher, its best day in six weeks.
Waller, Daly support December rate cut, voicing labor market concerns. Fed Governor Waller today voiced his support for a rate cut at the next FOMC meeting, which begins December 9. Waller said his “concern is mainly [the] labor market, in terms of our dual mandate.” However, Waller does expect a meeting-by-meeting approach and a “trickier” decision come January, pointing to labor and consumer price data, set to release December 16 and 18, respectively. San Francisco Fed President Daly, who rarely disagrees with Chair Powell in her public statements, also spoke today, taking a stance at odds with his most recent post-FOMC comments. Daly said she views a sudden deterioration in the labor market as more likely and more difficult to manage than inflationary pressures, calling out muted tariff-driven inflation effects this year.
Canadian Prime Minister expected to visit US as trade talks stall. US-Canada trade talks remain paused since late October, when the Ontario government funded an anti-tariff advertisement. Key issues in the negotiations are now largely expected to be handled as part of next year’s review of the North American trade accord. Canadian Prime Minister Mark Carney may travel to Washington on December 5 to attend the 2026 World Cup draw, though his attendance and whether he will discuss trade with President Trump are unconfirmed. While talks with the US remain frozen, Canada has made deals with other nations, securing a $50 billion investment commitment from the United Arab Emirates and resuming trade talks with India. At the G20 summit on Sunday, Carney said “When America wants to come back and have the discussions on the trade side, we will have those discussions.”
