Daily Macro Tape
26 Oct 2025 · built for traders, not tourists
Rates are flashing slowdown (10y UST < 4%). Equities and credit still act like
“soft landing + Fed will bail us out.” These two stories can’t both be right forever.
1. What just happened
Narrative
US inflation cooled again (around ~3% y/y). Traders now expect more Fed cuts,
not just a one-off. Stocks loved it: US big-cap tech and even FTSE in the UK
pushed toward highs because “cheaper money = higher valuations.”
Bonds told a different story. 10-year US Treasury yield is now under 4%, the lowest
close in more than a year. 2-year yields dropped to levels last seen in Aug 2022.
Translation: “Growth is fading. The Fed will have to ease more than they admit.”
Credit spreads (the extra yield corporates pay vs Treasuries) are still tight.
That means credit desks are basically saying “calm down, we’re not in stress.”
Usually, credit widens early in a real slowdown. So either bonds are overreacting
or credit is asleep.
Powell’s tone has shifted from “kill inflation no matter what” to
“we also care about jobs.” Markets hear that as a soft promise of rescue:
if the labour data cracks, cuts come fast.
Equities translate that as free upside.
Rates translate that as “the cycle is tired.”
Desk summary: Equities are pricing “slowdown is gentle.”
Rates are pricing “slowdown is real.”
Credit is shrugging.
2. Snapshot board
Numbers
| Asset | Level / Move | Desk read |
|---|---|---|
| US 10y yield | 3.95% ▼ -0.40% | Bond market saying “growth is tiring.” |
| US 2y yield | 4.05% ▼ multi-month lows | Pricing aggressive Fed cuts again. |
| US CPI (y/y) | ~3.0% | Below the scary 2022 prints, fuels “Fed can chill.” |
| Credit spreads (IG/HY) | Still tight | Credit not stressed = “no default wave (yet).” |
| FTSE / US Mega-cap | Near highs ▲ risk-on | Equities still betting on “soft landing”. |
Tiny math:
In July, 10y UST was about 4.4%. Now it’s ~3.95%.
That drop is 0.45 percentage points = 45 basis points = 0.45%.
For rates people, a ~45 bp rally in the 10y with no “Lehman moment” headline
basically means: “future growth got marked down.”
3. Chart of the day: 10y US yield
Drift lower
US 10y Treasury Yield
3.95%
Lower yield = bonds bid = “people are buying safety / expecting cuts.”
When this line dives without a crisis headline, it usually means the
bond market thinks growth is quietly rolling over.
4. Watch next
24h risk
- If US labour data softens → Powell cuts faster → yields keep falling → equities may actually like that (for a while).
- If inflation refuses to keep dropping → yields can snap back ↑ fast → that usually slaps high-multiple tech first.
- If HY credit spread finally widens, that’s when the “everything is fine” mood breaks.