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.
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