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Hawkish Fed & Horrible Data Hammer Stocks; Bonds & Black Gold Bounce
Hawkish Fed & Horrible Data Hammer Stocks; Bonds & Black Gold Bounce
Another day, another set of ugly US macro data as PMIs plunged…
Hawkish Fed & Horrible Data Hammer Stocks; Bonds & Black Gold Bounce
Another day, another set of ugly US macro data as PMIs plunged to post-COVID-lockdown lows (worse than expected), all of which sent the US Macro Surprise Index back into the red (this was the biggest weekly drop since May)…
Source: Bloomberg
That was then piled on by some FedSpeak, reinforcing the hawkish message…
DALY: “INFLATION IS TOXIC”, FED “IS FAR AWAY” FROM ITS PRICE-STABILITY GOAL, MAY NEED MID-4% OR MORE JOBLESS RATE FOR LABOR-MKT BALANCE
MESTER: HAVEN’T SEEN IMPROVEMENT ON SERVICE-PRICE INFLATION
And as if that wasn’t enough, she explicitly called out ‘the markets’:
DALY: DON’T KNOW WHY MARKETS ARE SO OPTIMISTIC ON INFLATION, PREPARED TO HOLD PEAK RATE MORE THAN 11 MONTHS IF NEEDED
MESTER: NEED TO KEEP FUNDS RATE ABOVE 5% IN ’23 TO CURB PRICES, FED HAS `MORE WORK TO DO ON INFLATION,’ IT’S TOO HIGH
Which remain massively (and dovishly) decoupled from The Fed’s expectations…
Source: Bloomberg
Fed rate-trajectory expectations are actually lower on the week, driven by the plunge after the cooler than expected CPI print on Tuesday, but have been rising since on Hawkish FedSpeak…
Source: Bloomberg
The ‘good’ news for The Fed is the hawkish talk has stopped financial conditions ‘easing’ any further from tightening policy positions…
Source: Bloomberg
This helped send stocks lower for a second straight week with Nasdaq the biggest loser…
Overnight saw selling pressure start as Europe opened again. Then everything reversed into the OpEx open which sparked a quick squeeze but that faded fast into the European close. Late in the day, the inevitable chaos of a huge quad witch expiration sparked a buying panic, but stocks ended the day red still…
The S&P ramp at the close lifted it back to its 50DMA…
We note that the original FANG stocks have now lost over 50% of their peak market cap from Nov 2021 (down to $2.5 trillion from a peak at $5.11 trillion), tumbling over $600 billion this week alone…
Source: Bloomberg
Treasury yields were all lower on the week with the short-end outperforming (2Y -16bps, 30Y -3bps) on the week…
Source: Bloomberg
The dollar ended the week unchanged, recovering all of its post-CPI plunge on the hawkish Fed statement…
Source: Bloomberg
A big round-trip in cryptos this week, running higher on the soft CPI and erasing gains on a hawkish Fed…
Source: Bloomberg
Gold and silver ended the week flat to very slightly lower. Gold futures managed to bounce back up to $1800 today…
But crude bounced higher after two ugly weeks, with WTI bouncing from a $70 handle up to almost $78 before fading back to $74 after The Fed…
Finally, cash continues to be king (and not trash as Dalio suggested) in 2022…
Will it continue to be in 2023?
Tyler Durden
Fri, 12/16/2022 – 16:01
nasdaq
gold