Stocks & Bonds Spike As Growth/Stagflation Scares Soar

Target was trounced on its inventory “glut” debacle as the bullwhip effect is in full effect… but dip-buyers stepped in (or share-buyback-ers) and put some lipstick on that pig (a pig that is the canary in the coalmine – to mix metaphors – for the rest of the US economy, over-stuffed and under-consumed)

0930ET – the US equity market cash open – was once again an incredibly bullish event as the slow drip of overnight weakness was immediately flipped into a buying-panic that paused briefly around the European close and then re-acclerated to drag the S&P and Nasdaq up 1%, Small Caps +1.5%…

Today’s ramp dragged the S&P and Dow back to unchanged from the pre-payrolls level right before Friday’s plunge

The correlation regime between stocks and bonds has flipped once again with bond and stock prices rising together today as the impact of rate-locks (due to a heavy IG calendar) are shrugged off)…

Source: Bloomberg

Treasuries were bid across the curve today (except the short-end), erasing much of yesterday’s rate-lock surge in yields (2Y +1.5bps, 30Y -7bps)…

Source: Bloomberg

10Y rallied back below 3.00% today, finding support (in yields) at th epeak of the post-payrolls spike from Friday…

Source: Bloomberg

Today’s moves in bond-land flattened the yield curve dramatically…

Source: Bloomberg

Rate-hike expectations were very modestly lower today

Source: Bloomberg

The dollar reversed overnight gains as the US equity market opened and ended the day lower against its fiat peers…

Source: Bloomberg

It’s been a wild ride from crypto this week. Bitcoin ended the day only modestly lower but managed to scramble back from its death-free-fall overnight in Asia trading, back up near $31,500…

Source: Bloomberg

Gold rallied back above $1850 today…

Oil prices surged again with WTI topping $120 ahead of tonight’s API inventory data…

Are we near the end of this epic rally? With a blow-off-top sparking real demand destruction next?

CHART OF THE DAY: Play long enough with a left-and-right y-axis double scale, and one can fit two charts and show a strong correlation. In this case, however, there’s a single scale (right), and the correlation is scary: Brent market in 2007-to-2009, and in 2021-to-date | #OOTT pic.twitter.com/IgjEe3Exy8

— Javier Blas (@JavierBlas) June 7, 2022

Finally, today was a great day for buying stocks – The World Bank downgraded global economic growth and warned of staglfationary pressures building.. (ya think!)…

Source: Bloomberg

And The Atlanta Fed downgraded US economic growth to 0.9% and stagflationary threats are screaming…

Source: Bloomberg

As US financial conditions have eased in the last two weeks, we wonder – like Nomura’s Charlie McElligott – if The Fed will once again jawbone the aggressive inflation-fighting hawkishness and tighten conditions once again…

Get back to work Mr.Powell (though we are not exactly sure wtf you’re gonna do now!)