Global major financial markets continue to speculate on whether there will be an interest rate cut in December, and this speculation is occurring during a period of liquidity tightening, which has had a significant negative impact on risk assets.
The bond market has been the most visibly affected, as increased uncertainty about a potential December rate cut has driven demand for shorter-term bonds as a flexible hedge, resulting in the selling of long-term bonds and a rise in 10- and 30-year yields.
Meanwhile, tonight saw the completion of a short-term bond auction involving 170 billion for March and June maturities, adding further strain to the market amid this phase of liquidity tightening.
The sell-off in long-term bonds has also led to a short-term increase in the US Dollar Index, as more funds are converted into dollars before seeking new investment targets.
US stocks were able to catch a breather following Gurbisz's remarks and the conclusion of the short-term Treasury auction. The VIX index has since retreated, indicating that the market is beginning to stabilize in the short term.