Market Summary:

Market Summary: October kicked off with big gains in bonds and stocks. Weaker than expected ISM manufacturing and construction spending data, on top of more recessionary indications from UK and European PMIs, spurred a hefty oversold rally. Gilts also surged on the U-turn from the UK government which confirmed it will scrap plans to abolish the 45% top tax rate that applies to high earnings. Additionally, the markets further tapered Fed tightening projections on the belief that the slowing seen in growth will force a pause in rate hikes in early 2023. Yields plunged through the morning with the belly dropping over 25 bps with the 5-year hitting 3.78%, while the 2- and 10-year rates were down over 20 bps to lows of 4.029% and 3.56%, respectively. However, comments from the Fed's Williams that the Fed has more work to do, and the hefty demand for risk saw bonds close with rates only moderately lower at 4.09% on the 2s, 3.87% on the 5s, and 3.63% on the 10s. Stocks were ripe for a big gain too after one of the worst performances for a September in two decades, not to mention the losses on the week, the quarter, and the year. Thee major indexes were all sharply higher with the S&PS 500 up 2.59% to 3678 after dropping below the 3600 level on Friday for the first time since 2020. The Dow climbed 2.66% and the NASDAQ was up 2.27%. Strength in energy was a big part of the rally. Oil prices ticked up with WTI rising to $83.63 on talk of a 1 M barrel output cut from OPEC. The DXY dollar index was softer on the tempering in the FOMC outlook and closed at 111.745.