Bear flattener

The ADP report came out strong today: +158k vs. expectations of +100k. Its spooking the bond market, and I think that's a sign the market was out of breath when the 10-year was at 4.40%.

We're also 2bps flatter between 2's and 10's. Its interesting to think about what various combinations of market direction and curve slope direction mean.

Bull Flattener: If yields on the long end are falling more than those on the short-end, it means the market is pricing in more Fed cuts, but is not pricing in the first cut any sooner.

Bear Flattener: If yields on the short end are rising more than those on the long end, this means the market is delaying the expected first Fed cut, but still expects the same or a similar number of cuts eventually.

Bull Steepener: Here, the short end is rallying more so than the long end, which implies the first cut has been moved forward, but the number of cuts has not changed.

Bear Steepener: If the long end is leading a sell-off, this means that while the Fed may still cut soon, the number of eventual cuts has been reduced.