• US stock indexes posted considerable gains Friday (Oct 6, 2023) despite an initial battering from rising yields after the US Non Farm Payroll readings for Sep-23 missed expectations by large, taking a 336k hike as opposed to forecasts of a meager 170k coupled with strong earnings release anticipations.

• The 10-yr UST yield closed higher at 4.78%,slidingdownfrom its peak of 4.81% in the first session, followed by the 2-yr yield jumpingby 5bps to 5.08%.

• The market responded positively to the weak average hourly earnings in Sep-23, which only rose 0.2% MoM/4.3% YoY (vs 0.3% MoM/4.3% YoY), setting the stage for a more favorable inflation outlook when coupled with the apparent weakening in crude demand (oil slipped -8.45% last week up to Friday).

• In the midst of these hawkish and dovish sentiments at play, markets have raised their expectations of a rate hike by the Fed to likely take place in Nov-23 or Dec-23 (almost a 50/50 probability reflected from the swap markets price-ins).

• A renewed risk on treasuries and the fight against inflation arose from the outlashes of Israel-Palestine conflict, with the two states having officially declared war, incurring a harrowing amount of casualties. Crude surged almost 5% during today’s opening, with the UST 10-yr movements tracked above c. 4.80% already. The 2s10s have once again steepened to c. -27 bps, the narrowest it has been this year, posing as a bearish risk for equities to start the week.