Soft CPI (bad data?) sparked a melt-up in stocks, bonds (prices), gold, and crypto which held in place until The Fed statement (more specifically the dotplot) which sent a more hawkish message to markets than was expected.
The initial reversal shock of the hawkish statement was quickly stymied by Powell's press conference where he shrugged off the dots and left the door open for cuts...
POWELL: FED PROJECTIONS AREN'T A PLAN, THEY CAN ADJUST
POWELL: WE ARE PRACTICING A SLIGHT ELEMENT OF CONSERVATISM ON OUR INFLATION OUTLOOK
POWELL: WE'RE ASSUMING GOOD BUT NOT GREAT INFLATION NUMBERS
POWELL: WE WELCOME TODAY'S INFLATION READING, HOPE FOR MORE
But realistically - as Jeff Gundlach noted - he was considerably more "on the fence" than he has been before...
Powell seems to consider the balance of risks a lot more, well, balanced. He mentioned more than once the risk that the job market could give way suddenly and sharply.
Bloomberg's natural language processing model showed that Powell’s opening remarks were right at neutral after being modestly dovish in May.
“Our ear test considered Powell slightly more hawkish than the May opening remarks, but very marginally,” BI’s Jersey says.
“Our NLP model confirmed this ear test, so it’s not surprising the front end of the market has sold off a bit listening to Powell.”
Today's soft CPI (bad data) sent the inflation surprise index lower...
Source: Bloomberg
The soft CPI sent rate-cut expectations soaring but the FOMC Dots sparked a reversal (mostly in the 2024 expectations)...
Source: Bloomberg
Stocks followed a similar (if not delayed) path as the FOMC statement dented the post-CPI spike (with Small Caps seeing a massive short squeeze higher). Powell was unable to keep the soft-CPI dream alive during his press conference as he so often does. The Dow was the day's laggard
Source: Bloomberg
AAPL once again saw an utterly irrational panic bid at the US cash open (as buybacks continued)...
Source: Bloomberg
Here's Goldman's trading desk:
Our buyback desk is currently running at 1.6x ytd daily avg notional executed. Extrapolate this to the entire street pacing at over $7b of vwap type of demand today. The biggest are getting bigger.
...but as we noted at the top, it seems the buyback dollars have run out...
did the buyback run out of $? https://t.co/AjeyVGMfaZ
— zerohedge (@zerohedge) June 12, 2024
Treasury yields were dramatically lower today with the belly of the curve outperforming. This shift erased all of the post-payrolls spike in yields..
Source: Bloomberg
Notably, we saw the long-term neutral rate rise for the second quarter...
Source: Bloomberg
The dollar ended the day lower but reversed a lot of the early CPI losses after the hawkish dots...
Source: Bloomberg
Bitcoin surged back up to $70,000 on the CPI print then reversed all the gains on the dots...
Source: Bloomberg
Interestingly BTC and AAPL dumped together on the FOMC dots but AAPL barely budged on the CPI data while BTC ripped (it's not the AI, stupid, it's the buybacks)...
Source: Bloomberg
Gold ended unchanged after CPI gains were erased...
Source: Bloomberg
Oil prices ended higher on the day but off their highs above $79 (WTI) after tumbling on the DOE inventory builds,basically retracing the post-API crude draw gains...
Source: Bloomberg
Finally, the last month has seen the post-Powell-pivot trend of stronger-hard-data and stocks has now completely broken...
Source: Bloomberg
Will today's reality check from The Fed's 'DOTS' punch stocks in the face?
