The DC Today - Thursday, November 2, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 2 November 2023
⏱️ 11 minutes
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Summary
Today's Post -
Big rally day, with markets posting a very nice fourth day of gains, closing up 564 points and putting us now up almost 5% on the week. While I would love to say it’s off to the races, under the hood, the relative underperformance of the higher beta components of the market just feels less convincing. Another bond market rally day as well, with 10’s coming down another nine bps to now 4.67%, along with continued yield curve volatility.
Following a slightly lighter-than-expected Treasury issuance report that was more front-end loaded on the curve and QT, which has removed the largest buyer of the front end, we’ve gone from 18bps inverted yesterday morning to now 30bps.
For those citing the historical track record of an inverted curve un-inverting just before a recession starts (looking at you ‘bond king’), the last two days have us in the opposite direction.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:13.9 | Hello and welcome to DC today. Today is November the 2nd. And a nice rally day on the market today. |
| 0:23.2 | We were up 564 points on the Dow. |
| 0:26.2 | So pretty broad-based across the board in markets. |
| 0:30.1 | It puts us up about 5% on the week so far if we were to close here, but it's not Friday. |
| 0:36.5 | So we still have tomorrow, and we'll see where that kind of gets us. But if it did close here, but it's not Friday. So we still have tomorrow and we'll see where that kind of gets us. |
| 0:39.9 | But if it did close here, it would basically be the best week of the year so far, going back |
| 0:45.2 | about 12 months to November of last year. |
| 0:48.3 | So a nice little move to the upside. |
| 0:49.9 | A lot of it has to do with some perceived certainty. |
| 0:53.8 | I guess there really isn't ever total certainty, but on interest rates, |
| 0:58.2 | yesterday the Fed kind of left rates unchanged. |
| 1:01.5 | They've done that for the second time, second meeting that they've left them the same. |
| 1:05.5 | And since then, most of the yield curve has moved lower. |
| 1:10.7 | So meaning the bonds have rallied. The long end of the curve has moved lower. |
| 1:12.5 | So meaning the bonds have rallied. The long end of the curve has rallied much more. |
| 1:15.8 | So the yield curve technically, which was, |
| 1:20.0 | it's been inverted for a long time, a year almost, |
| 1:23.5 | has started uninvert a little bit, |
| 1:25.3 | meaning that it was negative 100 plus basis points at one point. |
| 1:29.0 | And as of yesterday morning was down to about 16 to 18 basis points inverted. |
| 1:34.8 | And so now we're kind of going the other way, which is that the short end of the curve is |
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