The US curve disinversion looks to have some staying power.

The 2s10s turned positive Wednesday amid a fairly pronounced bull steepener, as traders pressed dovish Fed wagers in the wake of a JOLTS report which showed job openings across the world’s largest economy fell more than expected.

Recall that the 2s10s briefly disinverted this time last month as traders grappled with a historic VIX spike and a total meltdown in Japanese equities. Between Wednesday’s JOLTS release and Tuesday’s lackluster ISM manufacturing report, the perceived odds of the Fed going bigger, sooner were marked up.

Note that the FF/2s inversion was 156bps on Wednesday.

That’s not tenable. They need to cut. And, obviously, they’re going to cut.

But notwithstanding the aggressively dovish mid-week price action in rates, getting to 50bps at the September FOMC meeting is still going to require a material undershoot on the NFP headline, another uptick in the jobless rate or both. It’s hard to imagine Jerome Powell getting everyone on board for a half-point move based on ISM subindexes, JOLTS and the household survey.

Raphael Bostic on Wednesday drew a distinction between a weakening labor market and a weak one. The US has the former, but not the latter. Hiring’s slower, but firings are few and far between, he went on. Although Bostic said inflation’s receding “quickly and broadly,” he also emphasized it was too early to declare victory.

You get the idea: The Fed’s getting there, but they’re not convinced of the case for a half-point cut out of the gate. Not yet.

With that in mind, note that market pricing reflected 110bps of Fed cuts by year-end though mid-day Wednesday.

As the figure shows, that was the most aggressive in weeks.

Remember those betting odds I mentioned on August 20? The ones I said were grossly mispricing the chances of a 50bps September rate cut when they were ¢16 versus the STIRs-implied ~30%? Yeah, well, they were ¢37 on Wednesday. And I can now confirm that Polymarket has sufficient intraday liquidity for an “average” person to take profits.

With that in mind, Polymarket had “no change” at the November FOMC at ¢10 as of this writing. If — and, as noted above, this is still a very, very big “if” — the Fed does go 50bps in September, the odds of a follow-up cut in November, two days after the election, will be quite low in my opinion absent ongoing, material labor market deterioration.

Bottom line: The Fed would probably prefer a quarterly cadence for rate cuts if possible, and ideally at SEP meetings. If they start with a quarter-point move this month, then sure, it’s possible they cut again by 25bps in November and then deliver another quarter-point in December. If, however, they start with 50 this month, I think November’s a skip.

But, again, it all hangs on the NFP headlines and the trajectory of the jobless rate.