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Wednesday, August 10, 2022

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Bitcoin, Big-Tech, & Black Gold Bid As Hawkish FedSpeak Batters Bonds

A weak claims print and a double-whammy of hawkish FedSpeak (from Bullard and Waller) prompted stocks and bond yields to surge higher…

  • *BULLARD: URGENCY TO TAKE CARE OF INFLATION AS SOON AS POSSIBLE

  • *BULLARD: US MACRO SITUATION STRAINING FED CREDIBILITY ON TARGET

  • *WALLER: MARKETS ARE EXPECTING A RECESSION, LET’S GET IT DONE

  • *WALLER: DON’T SEE FED MAKING THE `STOP-AND-GO’ MISTAKE OF 1970S

  • *WALLER SAYS CLIMB IN HOUSE PRICES OF LAST TWO YEARS `INSANE’

The Fed’s rate-trajectory ticked up hawkishly…

Source: Bloomberg

Which presumably means a recession will come sooner and therefore a Fed response sooner and therefore BTFD in the crappiest most-beaten-down stocks to front-run that reaction-function.

The US equity market open was massively bullish (apparently) with Small Caps and Nasdaq outperforming and that ramp extended on the back of another huge short squeeze all day…

This is the 4th straight winning day for stocks – equaling 2022’s best-win-streak.

After yesterday’s brief pause, the short squeeze continued today. “Most Shorted” stocks are up a stunning 13.5% from Tuesday’s opening lows…

Source: Bloomberg

Growth outperformed Value…

Source: Bloomberg

So-called “Smart” money is buying this dip for now…

Source: Bloomberg

Notably, 6 of the last 7 payrolls days have ended lower 6 hours after the print (whether it was a beat or a miss)…

Source: Bloomberg

Bonds were dumped again today, extending yesterday’s surge in yields, with the belly the pivot point again as 5Y rose 7bps and 2Y rose 3bps…

Source: Bloomberg

10Y Yields rose back above 3.00%…

Source: Bloomberg

Notably, USTs are significantly unattractive relative to domestic sovereign bonds for Europeans and Japanese…

Source: Bloomberg

On a side note, mortgage rates crashed in the last week – the 40bp drop is the biggest weekly drop since Lehman…

Source: Bloomberg

The dollar leaked lower on the day after 2 big ‘up’ days…

Source: Bloomberg

Cryptos rallied notably today with ETH back above $1200 and BTC surging back near $21,500…

Source: Bloomberg

Massive surge in NatGas after a smaller than expected storage build…

Oil prices surged on the day on supply anxiety in Texas and Kazakhstan…

For some context, the following chart adjusts EU and US NatGas to an oil barrel equivalent – European Nattie is currently trading at triple the cost of US NatGas (which is trading in line with WTI)…

Source: Bloomberg

Gold managed very modest gains on the day…

And finally, we note that Bonds remain (relatively) the most ‘risky’ assets, followed by FX with oil rather surprisingly calm

Source: Bloomberg

But bonds remain ‘cheapest’ relative to stocks in 11 years…

Source: Bloomberg

What will change after tomorrow’s payrolls print?

This post was originally published on this site

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