'Bad news' - a record downward revision in payrolls - combined with a strongly 'dovish' bias to the FOMC Minutes sent rate-cut expectations soaring today...
Source: Bloomberg
...dominated by 2024 dovishness - dramatically more than The Fed's single-cut expectation...
Source: Bloomberg
...and that sparked a buying-panic in bonds, bitcoin, stocks, and gold (but the dollar and crude tumbled).
Stocks and bonds are (arguably) disagreeing...
Source: Bloomberg
Stocks initially surged on the BLS bad news and Dovish Fed, but some reality started to set in again that 'growth scares' are real enough to have prompted The Fed to consider a July cut and now a September cut seems locked in.
The market was completely confused at what to do with the payrolls revisions at first - which were delayed (but leaked to several banks).
Small Caps led on the day (big short squeeze) but the rest of the majors ended up giving gains back. The last ten minutes of the day saw the machines back in charge, lifting stocks off unchanged...
Small Caps gains were once again on the back of a major short squeeze...
Source: Bloomberg
Mag7 stocks went nowhere for the second day, stalled at the pre-payrolls highs...
Source: Bloomberg
VIX rose for the second day in a row, back above 16...
...and worse still, VVIX (the real fear gauge) extended its bounce back above the 100 Maginot Line...
Source: Bloomberg
Treasury yields tumbled today with the short-end outperforming (2Y -6bps, 30Y -1bps). The entire curve is now below pre-CPI levels of yield...
Source: Bloomberg
...smashing the 2Y yield back below 4.00% (having stalled at pre-CPI high yields)...
Source: Bloomberg
That steepened the yield curve significantly, erasing the flattening post-CPI...
Source: Bloomberg
The dollar continued to dump, hitting 5-month lows...
Source: Bloomberg
Bitcoin surged back above $61,000 (helped by potential short squeeze)...
Source: Bloomberg
Gold rallied after the Fed Minutes, having been stomped back below $2500 (once again near The London Fix) earlier in the day...
Source: Bloomberg
Crude prices tracked bond yields lower, with WTI dropping to a $71 handle...
Source: Bloomberg
Finally, is Harris' honeymoon ending?
Source: Bloomberg
Source: Polymarket
Prediction markets are trending back towards Trump.
