Stocks Surge, Bonds Purge As FedSpeak Offers Nothing New
A beat for retail sales and industrial production (both in nominal dollars, don’t forget) but a gut-wrenching miss for homebuilder sentiment (not in nominally inflated dollars) set the scene for another hyperactive day in the markets but it was FedSpeak that dominated as various talking heads “spoke much but said little”:
0845ET BULLARD: MUST MONITOR IMPACT OF GLOBAL QUANTITATIVE TIGHTENING, US WILL BE RESERVE CURRENCY ‘FOR A LONG TIME TO COME’
1300ET KASHKARI: LOT OF CONFIDENCE THAT CENTRAL BANKS CAN LOWER DEMAND, DON’T KNOW YET IF FED ACTION WILL TRIGGER RECESSION
1400ET POWELL: WON’T HESITATE TO RAISE RATES ABOVE NEUTRAL IF NEEDED, THERE COULD BE SOME PAIN INVOLVED
They said nothing new at all, as @knowledge_vital succinctly noted:
“It seems like the Fed is happy with the present state of market expectations, and we struggle to really find anything that incremental in [Powell’s] remarks… investors need to stop looking for monetary ghosts… and reacting to what are simply reiterations.”
Equity markets were an virtuous combination of low liquidity, hedge positioning unwinds, and OpEx pinning which sparked wild swings once again, but today it was an ‘up-day’ with Small Caps and Nasdaq the huge winners…
Interestingly, stocks puked as Powell began his interview and ramped back up the moment he finished…
The Dow underperformed due to the bloodbath in WMT (worst day since 1987)…
Despite a notable surge today, 10Y Yields remain below 3.00% as it was the short-end of the curve that underperformed (3Y +14bps, 30Y +6bps)…
Source: Bloomberg
The yield curve notably flattened today amid all the FedSpeak, signaling fears of a policy error coming back (3s30s was down 10bps from its intraday highs)…
Source: Bloomberg
The dollar tumbled back to pre-FOMC levels…
Source: Bloomberg
Bitcoin once again traded around $30k, ending modestly higher on the day…
Source: Bloomberg
Wholesale Gasoline prices continue to rise and signal $5 national avg gas price is imminent…
Source: Bloomberg
WTI slipped lower today, hovering at $112.50 ahead of tonight’s API data…
But, for the first time since May 2020, front-month WTI settled above front-month Brent…
Source: Bloomberg
NOTE that this is July Brent vs June WTI so is a little misleading.
Gold pumped and dumped to end the day unchanged…
Finally, they managed buying calls at highs and have now loaded up on puts.
Will the scared retail trader will make a home run on those “fresh” puts?
Tyler Durden
Tue, 05/17/2022 – 16:01
