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The bullish euphoria that came from the possibility of a quick return to neutral rates after the Fed's 50 basis point cut in September has faded. But it's been swapped with a different bullish sentiment, one we all know very well: the strength of a hot economy, which has helped power the market all year — until that cut.

While inflation and economic reacceleration concerns have returned after a string of hot data (the September jobs report, the Consumer Price Index, hot retail sales, and calmer weekly jobless claims), the strength has done nothing if not buoy the market. It has done just fine (thank you very much) under the past few years of high interest rates and endless no-landing comments. A hot economy is good for stocks.

All this has kept the S&P 500 floating around its all-time high all week, now well over 5,800, as the index passes more and more year-end forecasts — and their subsequent upward revisions, like UBS's 5,850 figure that it published Tuesday.

The mood feels different than a month ago. But as our Chart of the Week shows, not a whole lot has actually changed in terms of expectations — especially to the downside.

The latest Bank of America Global Fund Manager Survey shows the soft landing potential may have slightly decreased. But the hard landing respondents faded just as much, falling into the single digits for the first time since June, with just 8% seeing a recession in the next 12 months.

Checking in with the CME's FedWatch tool also shows little change. The belief that the Fed will continue to cut interest rates in November is still overwhelming, with the tool showing a 91% chance of a 25 basis point cut on Friday.

Reconciling these two things — another potentially reaccelerating economy and a rate cut the market is almost certain of — sounds tough. But it's not when you remember how high rates still are, as we wrote earlier this week in Chart of the Day. As Minneapolis Fed president Neel Kashkari said this week, rates are still "overall restrictive."

Jason Furman, the former Council of Economic Advisers Chairman under President Barack Obama, told Yahoo Finance that he sees inflation as a bigger problem than recession right now. But the current Harvard professor mused that while "the Fed needs to have tight policy, it just doesn't need to have policy being as tight as it was last year."

High — but lower than they were — for longer.

Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on X @ewolffmann.

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