Kuroda shocked the markets with his ‘market function’ fix overnight by allowing yields to rise and stepping up his bond-buying game…
The overnight action by the BOJ prompted the biggest jump in the yen this century…
Source: Bloomberg
Which slammed the dollar back down to pre-FOMC levels…
Source: Bloomberg
Sending gold higher, with futures above $1825 (at recent resistance)…
Source: Bloomberg
And Bitcoin spiked on the BoJ news, then spiked again as the cash equity market opened (back above $17,000) before sliding back a little…
Source: Bloomberg
JGB yields exploded to their highest since 2015 – 10Y up 15bps – the biggest daily jump in yields since 2003…
Source: Bloomberg
Which dragged UST yields higher with 10Y Yields breaking up to 3.70% (highest in 3 weeks)…
Source: Bloomberg
US equity futures tanked on the headlines but had recovered by the cash market open (entirely ignoring seriously ugly housing data), then spent the day trying to hold on to gains. Nasdaq ended the day unchanged-ish while Small Caps outperformed…
TSLA tumbled over 7% today to its lowest since Nov 2020 (down 6 of the last 7 days and 10 of the last 12 days…
Source: Bloomberg
Amazon became the first company to lose $1 trillion in market cap today – the biggest loss in history…
Source: Bloomberg
VIX limped lower but remains broadly range-bound despite the swings in stocks…
Source: Bloomberg
Treasury yields were all higher on the day but the short-end was a major outperformer (only up around 1bps compared to the rest of the curve up around 10bps)…
Source: Bloomberg
Oil prices managed gains with WTI getting with a tick of $77 intraday…
Finally, as Bloomberg notes, December usually bodes well for the S&P 500 index, with 1.2% average gains seen over the past 30 years and just 14 negative occurrences over the past 50 years. Yet, due to pressure from hawkish central banks and recession risks, December 2022 is set to be an exception as one of the worst last months of the year for the US benchmark since 1957.
The index has dropped about 6% this month, on par with the losses sustained in December 2002 and only strongly outweighed by the year-end rout of 2018.
Source: Bloomberg
And after that things don’t look too rosy either as The New York Federal Reserve’s two probability models appear fairly convinced a recession is likely in 2023,
Source: Bloomberg
…with the one based on the yield curve surpassing the levels recorded ahead of the 1990 and 2020 contractions and approaching the Great Financial Crisis’ peak, Bloomberg Intelligence strategists Gina Martin Adams and Michael Casper said in a note Tuesday.
