For a split second the market was confused.

The October Rally has been built on the notion of aggressive rate cuts in 2024. But the spike in consumer sentiment is the kind of thing that gives the Fed pause when it comes to shifting gears.

But after thinking it over for a nanosecond major indexes found their footing and began to move higher eventually triggering panic buying.

Here’s what the University of Michigan had to say about sentiment:

Year-ahead inflation expectations softened to 2.9% after plunging in December. The current reading is the lowest since December 2020 and is now within the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations edged down to 2.8%, falling just below the 2.9-3.1% range, seen for 26 of the last 30 months. These expectations remained slightly elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.

While stocks are popping the chances of a rate cut in March are dropping.

And do not look now, but bond yields are also climbing higher.  I think 4.20% on the ten year stops the stock rally in its tracks.

At least for a moment.

It’s full speed ahead but keep your head on swivel and let’s remain nimble.