We enter the week with stocks and bonds down even as Congress averted the government shutdown. The rate on the 10 YR Treasury hit 4.7% during a roundtable discussion with Jerome Powell and Patrick Harker as investors tried to look for clues on how much higher the Fed will go. It seems we are finally seeing more people wake up to the reality that rates will be higher for longer than previously thought.

In equities, it is the mega caps that are outperforming to kick off the week, leaving the average stock struggling for air. At the index level, we are testing support with oversold conditions. Breadth remains poor while volatility is elevated.

Newton scores are weak across styles as value edges out growth slightly. The short end of the Treasury curve looks relatively more attractive as interest rates climb higher. Energy is the highest-graded sector while Real Estate is the worst.

On the economic front: It is a heavy week on Fed Speak and on the labor market front. The most notable will be the jobs report on Friday morning, where investors are expecting another decrease in the pace of hiring from 187,000 to 168,000. The Fed would like to see cooling wage growth and a softer headline number to support a pause through the rest of the year.