A big day in the Treasury market went smoothly, driving yields lower, Matt writes.

Why it matters: The recent rise in yields took the wind out of the stock market's sails over the last couple of months.

• The T-note yield had climbed to 16-year highs just shy of 5% by late October, from less than 4% at the end of June.

Driving the news: The Fed left monetary policy unchanged yesterday and the Treasury detailed smaller-than-expected sales of long-term securities, setting off a rally in Treasury prices, which pushed yields — which move inversely — lower.

• The lower yield helped push the S&P 500 up 1.1%, in its third straight gain.

Zoom in: Bond yields started to fall at around 8:30am when the Treasury Department issued the latest update on the details of its quarterly process of rolling over maturing debt and financing any new deficits, known as the "quarterly refunding."

• Essentially, the Treasury announced plans to sell a more modest amount of long-term debt than the market seemed to expect (instead, it boosted its plans for shorter-dated notes).

How it works: The basic logic of markets is, if a product is in lower supply, and demand stays more or less the same, prices should rise.

• That's what happened in the Treasury bond market, as the announcement of lower-than-expected supplies of long-term bonds pushed Treasury prices up, and yields lower.

Separately, the Federal Reserve at 2pm announced that it would leave short-term rates alone, instead of hiking again. Half an hour later Fed chair Jerome Powell's news conference reinforced the idea that the already implemented rate hikes are still working their way through the economy, so the central bank is in no rush to hike further.

What they're saying: "Our read is that the Fed is in the process of transitioning into the next logical stage of the cycle – i.e. leaning on the higher-for-longer messaging to avoid being pressured to cut rates before the Committee deems it prudent," wrote analysts with BMO Capital Markets.

The bottom line: The bond market seems to like that kind of message, and so do stocks.

"The fact is the committee is not thinking about rate cuts right now, at all. We're not talking about rate cuts."

Why it matters: Powell's comments highlight that the Fed's focus — in the face of a strong economy — remains on whether it will be necessary to hike rates further.

The bottom line: It sounds like policymakers see little indication of any sort of serious economic slowdown on the horizon.

✨ Scoop: Yellen's stage-setter for the Biden-Xi meeting. (Axios)

☕️ Starbucks reports record sales for its fiscal Q4. (AP)

⚖️ Big landlords are colluding to raise rents, D.C. lawsuit alleges. (Axios)

🏙️ The cities that had the best post-pandemic bounce. (Axios)

It took a Kansas City jury just three hours to find that the National Association of Realtors conspired with two of the nation's largest brokerages to keep commissions on home sales high.

• It's going to take way longer for the verdict's ramifications to shake out, Emily writes.

Why it matters: U.S. homebuyers spend around $100 billion a year on broker fees — if the jury's verdict is upheld, that number will likely shrink and home prices could fall, too.

• The decision puts the defendants on the hook for $1.8 billion with the possibility of treble damages, and could also shake up the business of buying and selling homes.
• Real estate agents, investors and mortgage brokers are nervous about what's to come.

Catch up fast: At issue were the commissions paid to real estate agents on most home sales.

• Right now sellers typically pay a fee of 5%-6% of a home's sale price; that money is split between the seller's agent and the buyer's agent.
• The plaintiffs argued that NAR and its co-defendants conspired to keep those rates high and that the system prevents sellers or buyers from negotiating the fees down.

State of play: NAR said it would appeal the verdict, and ask the judge to lower the damages awarded.

• Even so, it's likely that these fees are going to start dropping now. Brokerage firms might start telling their agents to have conversations with clients about fees, welcoming negotiations, said Redfin CEO Glenn Kelman in a blog post.
• The impact: That sort of thing could spur fee competition between brokers — and competition is a great way to bring prices down.

Longer-term: If the jury's verdict is upheld, the plaintiffs also have asked the judge to establish a remedy.

• To take a page from Gwyneth Paltrow, that could mean that fees get consciously uncoupled — sellers pay their real estate agent and buyers pay their person. And each negotiates that fee down.
• The upshot from there could be home prices falling.
• That's because right now the fee paid to a homebuyer's agent is baked into the home's sale price, notes Steve Brobeck, a senior fellow at the Consumer Federation of America who's long worked on this issue. If that fee goes away or is reduced, the sale price will be lower.

Read more

The stocks of online real estate giants Redfin and Zillow dropped on the news of the jury verdict because, well, no one knows exactly what's going to happen.

Reality check: A real estate shake-up might not be so bad for these companies.

• Zillow, which isn't a party in the case, will "thrive" no matter how the litigation plays out, CEO Rich Barton told investors on an earnings call yesterday afternoon. "We're positioned really, really well for all weather."

Zoom in: Company execs expect the litigation will take years to play out, but in the near term will lead to more transparency on commissions, as well as new provisions that allow buyers and sellers to negotiate fees, Barton said.

• Those are the kinds of changes that were worked into settlements the plaintiffs negotiated with brokerages that settled before the trial.

Between the lines: In the longer term, if NAR becomes less powerful and loses control over the way real estate listings are posted, or if the use of buyer agents becomes less popular — or even goes away, as some insiders fear — platforms like Redfin and Zillow would likely benefit.

• They'd become a more vital source of information, home listings and advice; more akin to a classified service.
• That's still an unlikely scenario, though, Barton said.