The intraday rebound in US equities was likely driven by rising expectations of a Fed dovish pivot at the upcoming FOMC meeting on 17 September. According to the CME FedWatch Tool, Fed Funds futures now price in a 91% probability of a 25-bps rate cut to 4.00%–4.25%, up from 89% a week earlier.
Hence, the 2-year US Treasury yield, which is sensitive to the changes in the monetary policy stances of the Fed, rose by 2 bps yesterday, which is less than the 3 bps increase seen in the 10-year US Treasury yield
Stretching it out over a longer-term horizon, the 2-year US Treasury yield has fallen by 15 bps from 21 August 2025 to Tuesday, 2 September 2025, a higher magnitude in comparison to the 10-year US Treasury yield, which only dropped by 7 bps.
This observation seen on the US Treasury yield curve (10-year minus 2-year) is called a bull steepener, where short-term interest rates fall faster than long-term rates, widening the spread between them.
It tends to be bullish for the US stock market at least in the medium-term, as the liquidity infusion from the Fed can be used to negate the adverse effects of the US White House trade tariffs policies (see Fig. 1).
Let’s now take a deep dive into the short-term directional bias and key levels to watch on the US SPX CFD Index (a proxy of the S&P 500 E-mini futures) from a technical analysis perspective.
