Markets now assign about an 88% probability to a 25-bp cut on Wednesday, sharply higher than a month ago. Earnings from AutoZone, Oracle, Adobe, Broadcom, Costco and Lululemon will also shape sentiment. 

The 10-year Treasury yield moved above 4.1%, its highest level in two weeks, as investors reassessed the 2026 policy path. December’s Michigan sentiment reading showed firmer confidence, easing concerns about consumer resilience despite weak labor data. 

Bond markets continue to challenge the narrative of sustained easing. Long-term yields have climbed despite the Fed’s cumulative 1.5-percentage-point cuts since 2024, widening the gap between short- and long-term rates. Analysts point to a higher term premium, expanding bond supply and lingering inflation concerns as key forces keeping yields elevated even as policy rates fall.

Check out today's analysis to see how the market has started the new week!