A quiet macro day in the US - mixed bag of regional Fed survey data (Richmond Manufacturing good, Richmond Biz Conditions bad, Dallas Services bad) and plunging mortgage apps) - followed a hotter than expected inflation print in Germany, which sparked a further hawkish shift lower in rate-cut expectations with 2024 falling back to a 50-50 coin toss for 2 cuts or 1; and 2025 tumbling to less than 3 more cuts...
Source: Bloomberg
Treasury yields surged higher, led by the long-end (2Y +2bps, 30Y +7bps)...
Source: Bloomberg
...steepening the curve even more...
Source: Bloomberg
2Y Yields ramped within 0.25bps of 5.00%, erasing all the gains from payrolls and CPI...
Source: Bloomberg
And higher yields are starting to hit stocks. Today was relatively unusual for recent times with no big BTFD bounce back after almost non-stop selling from the cash close last night. Small Caps lagged on the day with S&P and Nasdaq the best looking horses in the glue factory. The cash open offered a little blip higher but that was sold into...
The Dow broke below its 50- and 100-DMA and Small Caps broke below their 50DMA...
'Most Shorted' stocks were monkeyhammered lower... again...
Source: Bloomberg
But, of course, MAG7 stocks levitated...
Source: Bloomberg
...as NVDA hit another new record high...
Since NVDA's earnings, everything but AI has been sold...
Source: Bloomberg
The dollar followed rates higher, back near one-month highs...
Source: Bloomberg
...which hit gold...
Source: Bloomberg
...sent oil lower with WTI back below $80...
Source: Bloomberg
...and bitcoin also fell back below $68,000 (despite the Blackrock flows news)...
Source: Bloomberg
Ethereum slipped back below $3800....
Source: Bloomberg
Finally, while financial conditions remain drastically loose (especially relative to Fed rates), we note that they are starting to tighten...
Source: Bloomberg
We've seen this before a few times this year - so let's not hold our breath, but The Fed surely wants the market 'tighter' than it is before it starts actually 'easing'.
