A quiet macro day ahead of the coming storm with just soft-survey data hitting. But having said that US Empire Fed Manufacturing exploded higher (smashing expectations by six standard deviations in September, +11.5 vs -4.0 exp, vs -4.7 prior)...
Source: Bloomberg
However, it was the WSJ's Greg Ip that prompted some chaos in markets with his weekend piece pitching 50bps cut this week. The market is now pricing in around 70% odds of a 50bps cut this week...
Source: Bloomberg
We do noted that 2025 rate-cut expectations are drifting lower as 2024 dovishly increases...
Source: Bloomberg
Interestingly, before we dive into the details of market moves today, we note that, ahead of the rate-cut(s), usage of The Fed's Reverse Repo facility plummeted to $239BN today - its lowest since May 2021 - as liquidity continues to bleed from the system (note that we have seen this purge and surge...
Source: Bloomberg
Goldman Sachs trading desk noted today was a fairly quiet start to “rate cut week” after “inflation week” turned in the best weekly performance for SPX all year, which reversed the worst weekly performance of the year from “jobs week” just two weeks ago.
- Most sitting on their hands ahead of Weds and digesting the various arguments for 25 vs 50 as mkt volumes are down -11% and on track for first sub-10B shr session since 8/27
On the day, Nasdaq was the sole stock index lower (down over 1% at its worst) with The Dow and Small Caps outperforming (S&P oscillated around unch). After Europe closed (following the very choppy US open), US equities drifted higher...
Nasdaq bounced higher off its 50DMA...
After five straight days of gains, the Mag7 stocks tumbled today (losing around $170BN in market cap) with AAPL and NVDA dominating the downside while META rallied...
Source: Bloomberg
VIX jumped back above 17 today...
Treasury yields were lower on the day with the long-end outperforming...
Source: Bloomberg
The 10Y yield closed at its lowest since June 2023...
Source: Bloomberg
The dollar drifted modestly lower today (4th day in a row), back below the Jackson Hole lows...
Source: Bloomberg
Gold made small gains today, consolidating at record highs...
Source: Bloomberg
Silver has been outperforming gold for the last few days and is back at two month highs relative to gold today...
Source: Bloomberg
The weakness in big-tech carried over into crypto with bitcoin clubbed like a baby seal back to a $57,000 handle, erasing all of Friday's surge...
Source: Bloomberg
Oil prices continued their rebound, with WTI back above $70 once again...
Source: Bloomberg
Finally, stocks and bonds remain decoupled (the latter thinking 'recession' and the former focused on 'rate cuts to save the world')...
Source: Bloomberg
The reflexive dichotomy of those two arguments may well come unglued after Powell makes his decision this week - 25bps or 50bps!?
