Bonds & Stocks Falter On Flood Of FedSpeak, Payrolls Paranoia

From the avalanche of FedSpeak today, there was no sign at all of a ‘pivot’ or ‘pause’…

• Overnight: BOSTIC: To those who think the Fed is going to begin cutting rates in 2023, “Not so fast.”

• 0850ET: MESTER SAYS US IS IN AN UNACCEPTABLY HIGH INFLATION ENVIRONMENT

• 0915ET: KASHKARI: ALMOST NO EVIDENCE THAT INFLATION HAS PEAKED, WE ARE QUITE A WAYS AWAY FROM A PAUSE IN RATE HIKES

• 1300ET: EVANS: INFLATION IS VERY HIGH, ISSUE IS TOP OF MIND FOR THE FED, CAN SEE THE FED SHOULD HAVE HIKED RATES SOONER

• 1300ET: COOK: FED LIKELY TO KEEP POLICY ‘RESTRICTIVE FOR SOME TIME’, CRITICAL TO STOP INFLATIONARY PSYCHOLOGY FROM TAKING HOLD, QUANTITATIVE TIGHTENING ‘IS THE RIGHT PATH’

And there’s more tonight:

• 1700ET: Waller

• 1830ET: Mester

And after all that, the market shifted hawkishly once again… as everyone holds their breath for tomorrow’s payrolls print…

Source: Bloomberg

UK risks reared their ugly head again as cable and gilts were monkeyhammered lower…

Source: Bloomberg

Pension funds are selling billions of pounds worth of assets to rebuild their cash buffers before the Bank of England removes critical market support next week that it introduced to prevent the collapse of the UK’s government bond market.

US Treasury yields spiked higher amid a sizable futures block trade early in the day. Lots of chatter of a significant rate-lock as MS started to market the TWTR deal debt…

Source: Bloomberg

By the close, yields had basically risen back to unchanged on the week (with 30Y underperforming)…

Source: Bloomberg

This is noteworthy since bond yields have dramatically decoupled from stocks…

Source: Bloomberg

Stocks have also decoupled from the market’s hawkish expectations of The Fed’s terminal rate…

Source: Bloomberg

Today saw US equity markets trading chaotically ahead of tomorrow’s payrolls print with overnight weakness suddenly met with a panic bid back to the overnight highs at the cash open, only to slapped back lower by the European close. Losses extended after 1430 (margin call time). The Dow was the laggard on the day, falling back below 30,000…

On the week, all the majors are still up 4-5% (with The Dow the laggard)…

Once again today, S&P stalled at 3800…

VIX rallied back above 30 ahead of tomorrow’s payrolls print…

The dollar rallied once again, erasing the early week’s losses…

Source: Bloomberg

Bitcoin chopped sideways, clinging to $20k…

Source: Bloomberg

Oil prices continued to rise with WTI testing up near $89…

Gold also closed green, with futures holding above $1700…

Finally, as a reminder, five of the last six monthly payrolls prints have ended with the S&P lower on the day (whether the data beat or missed)…

Source: Bloomberg

So will good news be bad news or bad news be good news tomorrow?