Following a benign CPI release Wednesday, the June PPI release also came in softer than expected this morning (and initial claims fell), sparking calls for "mission accomplished" headlines for The Fed.
But tomorrow marks the kick-off for the bulk of earnings season (with the banks reporting) which could spark some renewed volatility (although many suggest the bar for earnings season is already set so low that even Zelenksy could step over it).
The 'good' inflation news sent rate-change expectations for the rest of the year tumbling (July remains a lock for 25bps). The market is now pricing in a 25bps hike in July, no move through year-end, and a rate-cut in Jan '24...
Source: Bloomberg
The biggest headline-maker in the markets today was the USDollar. The DXY tumbled for the 6th straight day - the longest losing streak since July 2020 - down 4.5% in that period (the biggest such drop since Nov 2022).
Source: Bloomberg
The Dollar Index is back to pre-COVID-lockdown levels...
Source: Bloomberg
Nasdaq soared higher today as The Dow lagged (barely in the green) with Small Caps and the S&P up comfortably too...
The S&P 500 is now 3% above the level it was at when The Fed first hiked rates in March 2022...
Source: Bloomberg
Meme stocks are now up 17% in the last few days...
Source: Bloomberg
As 'most shorted' stocks continued to get squeezed, now up 20% in the last two weeks...
Source: Bloomberg
If those charts don't make you laugh, nothing will...
this is getting a bit ridiculous....
— SpotGamma (@spotgamma) July 13, 2023
Treasuries were bid once again today with the belly outperforming once again (5Y-15bps, 30Y -5bps), and all notably lower in yield on the week...
Source: Bloomberg
With 2Y Yields now down over 50bps from last week's highs, having thoroughly rejected the 5.00% and pre-SVB levels...
Source: Bloomberg
The yield curve (5s30s) surged steeper again today, edging ever closer to un-inverting...
Source: Bloomberg
Bitcoin soared to it highest since May 2022, helped by the SEC losing its case against Ripple. Ethereum also ripped today, back above $2000.
Source: Bloomberg
Oil prices extended gains today, helped by news that Libya's Sharara oil field will be halted, and the weak PPI easing restrictive Fed fears. WTI topped $77, back above pre-OPEC spike levels from March...
Gold held on to yesterday's gains...
Finally, as cash exits the Fed's reverse repo facility, it appears the US equity market is benefiting...
Source: Bloomberg
Is this what The Fed wants? Another wealth-creating bubble that will re-juice inflation?
