Courtesy of ZeroHedge View original post here.
The invasion of Ukraine and the events that have unfolded since have changed the outlook materially. A surge in energy prices has triggered a sharp downward revision in growth expectations and has increased the uncertainty over the growth path from here, particularly in Europe, and Goldman notes, has resulted in a shift in the narrative away from reflation towards stagflation. While US equities have been more defensive in this episode, global financial conditions have now tightened materially…
Which brings us to the question of "why hike?" that we asked and answered earlier in the week.
While the global picture is extremely tight, Goldman's US financial conditions index – while notably tighter than it was – remains easier than at any other time in decades apart from 2020/2021 (which may help explain the 40 year high print in CPI today, because unlike Psaki's narrative, we know this isn't all Putin's fault)…
Source: Bloomberg
For now, with negative-delta having been assuaged yesterday, and no optimistic headlines today upon which to ignite momentum (in fact the opposite – *KULEBA: RUSSIA SEEKS SURRENDER, UKRAINE WON'T SURRENDER; RUSSIA CONVEYED WILL CONTINUE TO ATTACK UNTIL DEMANDS MET)…
Re-enactment…
…global assets were hammered today (not helped by a surprisingly hawkish ECB). Of course, once Europe closed, dip buyers were back lifting everything back towards unch. Nasdaq was down 2.5% before the post-EU bid returned (but it still lagged while the rest of the majors fell around 0.5% on the day before the last second buying panic ensued)…
Bonds extended losses today with yields up across the curve as the long-end underperformed (2Y +3.5bps, 30Y +6bps). The belly continues to underperform on the week though with the long-end the least bad horse in the glue factory (yes 5Y and 7Y yields are up almost 30bps this week)…
Source: Bloomberg
10Y yields hit 2% and 30Y yields broke out above 2.40% – the highest since May 2021 – before a very solid 30Y auction dragged yields back off those highs, only to sold back to the highs in the last hour…
Source: Bloomberg
Rate-hike odds dropped very modestly for March (next week) but rose further for the end of the year with a 60-plus % chance of 7 hikes now…
Source: Bloomberg
The dollar rallied back into the green for the week after an initial burst of post-ECB euro-strength weakened the greenback, but could not hold…
Source: Bloomberg
Cryptos roundtripped Tuesday night's Biden EO gains with Bitcoin back below $40k…
Source: Bloomberg
ICE raised Brent crude futures margins by a dramatic 32% today (and Diesel Futs by an astonishing 90%) which did not help support the energy complex. It has been a wild week for industrial and energy commodities while PMs have held relatively calm and firm. Copper also took a beating this week…
Source: Bloomberg
WTI extended its losses today, trading back down to a $105 handle…
And a very similar picture in RBOB…
Gold rebounded back above $2000…
Finally, it could be worse… you could be long China tech…
Source: Bloomberg
In Rubles…
Source: Bloomberg
