DC Lite #465

1. US gas prices. "AAA data shows the national average for gasoline at the lowest level ($3.06/gallon) in nine months and nearing the psychological $3/gallon mark—a level that has not been breached since 2021."

2. SOFR options. "Recent activity in options linked to the Secured Overnight Financing Rate shows a buildup in positioning for a half-point reduction either when the Fed meets later this month or in December. That’s more than the two quarter-point cuts now priced into interest-rate swaps."

3. Asset class returns. "Every major asset class is in the green so far this year, the first time we've seen that since 2019. It's rare for the Fed to ease monetary policy into rising inflation and a melt-up in the equity/credit markets. And investors absolutely love it."

4. AAII Sentiment Survey. AAII sentiment reversed sharply over the past week with bears regaining the upper hand. The drop in the bull-bear spread was the largest since March.

5. Regional banks. "Regionals, the largest weighting in the Russell 2000 at 10%, continue to be broken. Won't be easy for smalls to keep running if regionals continue to break down."

ICYMI