Today saw the narrowest trading range of any day so far this month and by far the calmest day since the big September selling spree began.  Drama came in the form of an uncommon and esoteric development in short-term funding markets, which essentially and unexpectedly ran out of liquid cash.  This forced the short-term lending rate quickly higher (something that was already in progress yesterday and that got worse today). 

It's not that firms weren't on solid financial footing, just that they've been forced to buy a giant boatload of Treasuries this year (primary dealers have to submit bids at auction).  They can temporarily use those Treasuries as collateral to get the short-term cash they need, but the lenders in that system were so busy that they raised rates as a form of pipeline control.  The Fed stepped in as the lender of last resort and the short-term lending rate instantly returned to normal. 

None of this ultimately had any immediate effect on longer-term rates, although it could have if the Fed hadn't stepped in.  Speaking of the Fed, that's where the market's focus is, in general.  Tomorrow's rate cut odds are down to 50% at the close, although that's based on Fed Funds Futures, which are imperfect as a mechanism for determining probability.  The bigger deal is what Powell has to say and how the Fed's rate cut outlook has evolved.  You can also bet Powell will receive more than a few questions about today's funding snafu.  There's a chance his answers will make a new round of QE sound more likely to happen sooner than later--regardless of its need as a recession fighting tool.