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Friday, December 2, 2022

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Catrusstrophe &; Consumer Prices Clobber Bonds, Bullion, & Big-Tech

UK u-turns, soaring CPI, short-squeezes, endless FedSpeak, and Putin pontifications… what a week…

Amid the chaotic headlines from the UK (and the apparent end of BoE’s pension fund bailout), cable ended the week marginally stronger (though dumping today)…

Source: Bloomberg

…but gilt yields were notably higher after an ugly selloff today into the UK close (30 Gilt yields rose 60bps from their lows today)…

Source: Bloomberg

We suspect nothing is solved across the pond.

In the US, Treasury yields are all higher on the (shortened) week with the short-end underperforming (2Y yields closed the week above 4.5%)…

Source: Bloomberg

10Y Yields rose back above 4.00% again today and stalled there…

Source: Bloomberg

30Y Yields tagged 4.00% yesterday briefly and tried today but were unable…

Source: Bloomberg

At the short-end, the market’s expectation for The Fed’s terminal rate (hawkishly) surged to 4.96% (in March 2023). At the same time, market expectations of post-recession rate-cuts also surged (but dovishly)…

Source: Bloomberg

While stocks bounced back yesterday after the CPI print, the hawkish shift in rate expectations continued today and stocks started to catch down to that reality today…

Source: Bloomberg

US equity markets were just as chaotic as bonds after yesterday’s CPI puke and panic-buying squeeze which led to today’s reality check lower. A late-day dump meant the Nasdaq ended the day down over 3.0% after being up 1.5% pre-market…

On the week, only The Dow managed to close green with Nasdaq dumping all of yesterday’s gains and then some, closing down over 3%…

One bright spot is that today’s lows were above yesterday’s CPI-spike-down lows.

The S&P seemed to find support around 3600…

On the week, Staples & Healthcare outperformed while Discretionary and Tech were the laggards

Source: Bloomberg

Wells Fargo and JPMorgan outperformed today after earnings beats while Morgan Stanley missed and dumped almost 5%…

Source: Bloomberg

The dollar rallied for a second straight week, albeit with some crazy volatility…

Source: Bloomberg

JPY was a shitshow this week (down 8 days in a row and down 9 weeks in a row), crashing to its weakest against the dollar since 1990 (almost at the Maginot Line of 150)…

Source: Bloomberg

Despite yesterday’s surge higher, cryptos ended the week lower (with Bitcoin the prettiest horse in the glue factory, holding above $19k)….

Source: Bloomberg

Gold suffered its worst week since July (after 2 weeks of gains), unable to hold its bounce back above $1700…

Silver was slammed over 9% lower on the week, its worst week since Sept 2020…

A big reversal in the recent trend of silver outperforming gold…

After last week’s surge higher, oil prices tumbled this week with WTI unable to hold $90 (falling further today after an unexpected jump in the rig count)…

Finally, the 2008/9 analog continues to play out…

So is a bounce into the FOMC meeting set?

However, the market’s real fear gauge is surging higher… (FRA-OIS is an indicator of interbank funding stress)

Something’s going wrong in the market’s pipes.

Simply put, if the FRA-OIS spikes another 10-15 points, the Fed will have no choice but to emerge from its paralysis and reassure markets that the financial system isn’t about to experience another paralysis.

This post was originally published on this site

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