Futures chopped sideways to higher overnight then a triple whammy of better than expected labor market data (Challenger layoffs, ADP, and claims) sent stocks and bonds reeling as market expectations for The Fed's rate-trajectory shifted hawkishly...
Terminal rate expectations are rising...
Source: Bloomberg
Expectations for rate-cuts in H2 2023 are fading...
Source: Bloomberg
Stocks bounced briefly on unusually dovish-sounding comments from The Fed's Jim Bullard who noted "2023 may be a deflationary year... with rates close to restrictive." And then later in the day, Bullard went hawkish again, saying that "a strong job market means it's a good time to fight inflation."
Bullard is right, the labor market is dramatically decoupled (positively) from tightening financial conditions...
Source: Bloomberg
And that all dragged stocks lower overall with Nasdaq leading the way...
Bed, Bath, & Beyond was battered to 30 year lows on 'going concern' fears...
Source: Bloomberg
Silvergate Capital was slaughtered on outflows...
Source: Bloomberg
The short-end of the yield curve was smashed higher in yield today as the long-end was modestly lower in yield (2Y +9bps, 30Y -1bp). On the week, 2Y Yields are higher while the rest of the curve is lower...
Source: Bloomberg
All of which means the yield curve has flattened (deeper into inversion) this week
Source: Bloomberg
The dollar rallied up to one-week highs today (helped by EUR weakness overnight)...
Source: Bloomberg
Bitcoin chopped around relatively flat on the day...
Source: Bloomberg
Oil prices ended higher after some notable intraday volatility...
Dollar strength also weighed on gold, but the precious metal found support at $1830...
Finally, we note that overnight saw a landmark event in recent financial history...
Source: Bloomberg
Fore the first time since 2014, there are no negative-yielding bonds globally.
