There hasn’t been a clear catalyst for the turnaround in risk sentiment in the past two hours but it’s real and widespread. The S&P 500 just touched a record high and Treasury yields are inching up.

The FX market is also validating the move with risk trades improving. USD/JPY is up 104 pips to 149.24, which is narrowly below the August spike high of 149.40.

Tomorrow’s US CPI report will be a market mover and could underscore the space the Fed has to cut. The consensus on the headline is +0.1% m/m with the annual rate falling to 2.3%, just a hair above target. Core is running hotter but the Fed has been quick to dismiss housing-related inflation as a laggard.