Bitcoin, Bond Yields, & The Buck Bid; Gold Skids

Bank lending is crashing (hurting small businesses and commercial real estate the most), the labor market is starting to snap (confirmed by payrolls on Friday), and inflation expectations are re-accelerating (NYFRB’s survey today)… but apart from that, everything is awesome.

Source: Bloomberg

Since payrolls print on Friday, Treasury yields are up considerably, the dollar is surging, rate-hike odds are rising, bitcoin’s up as gold falls, stocks are broadly unchanged with big-tech is underperforming small-caps.

BoJ’s Ueda sparked the early weakness in stocks (and yen) after offering no signs of budging towards a more hawkish tone…

Source: Bloomberg

Small Caps are up solidly since payrolls, but Nasdaq, S&P and Dow are basically unchanged (with Nasdaq the laggard)…

Headlines hit around 1230ET about a drop in the amount of FHLB debt issuance (which has been an inverse proxy for bank pain). Stocks rallied on that (though ironically, regional banks were not very excited – since with both loans and deposits collapsing, banks don’t need as many backstop-measures).

Here’s Bloomberg’s take: The Federal Home Loan Bank system issued $37 billion in debt in the last week of March, a sharp drop-off from the $304 billion two weeks earlier, according to a person familiar with the matter. That plunge from an all-time peak earlier in the month is an early sign that the banking crisis has started to subside.

It did help that the headline sparked a short-squeeze: ‘Most Shorted’ stocks were squeezed off an opening drop, rallied up to Wednesday’s open and then faded back fast before the FHLB surge took it to the highs. That was a 3.5% surge from low to high today for ‘most shorted’ stocks, reminding us of JPMorgan’s warning from last week…

Source: Bloomberg

…And 0DTE traders surged in with aggressive call-buying to help with the momentum…

Source: SpotGamma

Notably the early weakness took The Dow down to its 100DMA once again… and once again it found significant support…

 

Cyclicals outperformed Defensives on the day…

Source: Bloomberg

Treasury yields were all higher on the day (up 2-3bps from Friday’s close but up significantly from overnight lows), extending Friday’s yield surge with the short-end underperforming…

Source: Bloomberg

2Y Yields jumped back above 4.00%…

Source: Bloomberg

Fed Chair Powell’s favorite yield-curve-based recession-signal continues to plumb new depths of inversion…

Source: Bloomberg

Rate-hike odds extended Friday’s hawkish rise with a May 25bps now at 75%…

Source: Bloomberg

USDJPY surged above its 50- and 100-DMAs (yen weakest relative to the dollar in almost a month)…

Source: Bloomberg

Which, of course, sent the dollar index soaring

Source: Bloomberg

Cryptos rallied today, led by bitcoin, with some pointing to positive comments from Hong Kong authorities on web3 (ironic given the US’ current crackdown on anything digital)…

Source: Bloomberg

That lifted Bitcoin back above $29,000 to its highest since June 2022…

Source: Bloomberg

Spot Gold prices fell back below $2000 (as the dollar spiked)…

Source: Bloomberg

Oil prices continued to tread water with WTI trading down to $80 but still in general holding the range since OPEC+’s surprise…

Finally, Bloomberg notes that speculators timed it just about perfectly before Friday’s strong US payrolls data, adding the most to their bets against benchmark Treasuries in just over a year. Net-short leveraged fund positions in 10-year futures climbed by almost 150,000 contracts in the week to last Tuesday, the biggest bearish shift since March 2022

Source: Bloomberg

“Although US yields bounced following the jobs report, they remain below levels from the prior week, leaving room for more upward repricing,” Goldman Sachs Group analysts including Praveen Korapaty wrote in a note.

“The mix of March data thus far should solidify the case for a hike at the upcoming May FOMC meeting.”

But today’s moves basically stalled at Friday’s highs.