This morning's smorgasbord of macro data was not pretty for the 'soft landing' crowd as retail sales plunged, industrial production puked, PPI fell (deflationary?), and capacity utilization collapsed...
Source: Bloomberg
The economic weakness prompted a dovish response by the STIRs market as the terminal rate expectation dropped below 4.90% and expectations for H2 2023 rate-cuts topped 50bps...
Source: Bloomberg
To visualize that, the market expects The Fed to pause in May and then begin a massive rate-cutting pivot...
Source: Bloomberg
However, multiple Fed speakers today (Mester, Bullard, George, and Harker) all signing from the same hymn-sheet on 'inflation is down but not enough to stop yet' and 'rates will go higher and stay higher for longer'... the market is diverging dramatically from that view...
Source: Bloomberg
Nasdaq was on target for an 8 day win-streak - the longest since Nov 2021 - but that 7-day streak broke today. The Dow was the biggest loser onm the day, down 1.8%...
For some context, The Dow is now up 'only' 1.% from pre-Payrolls...
S&P 500 dropped back below its 200DMA and Nasdaq dropped below its 100DMA
The 'squeezers' ran out of ammo today as "most shorted" stocks ended lower after 7 straight days of squeezes...
Source: Bloomberg
Treasury yields tumbled today with the belly of the curve outperforming dramatically (5Y -19bps, 2Y -13bps, 30Y -12bps) with the long-end lagging on the week...
Source: Bloomberg
10Y dropped to its lowest yield since Sept 2022...
Source: Bloomberg
"Recession" anyone!!! The yield curve (3m10y) collapsed to a new low (130bps inverted now!)...
Source: Bloomberg
The dollar pumped, dumped, and re-pumped on the day to end higher...
Source: Bloomberg
USDJPY had quite a day, with yen tumbling on the BoJ nothingburger, but rallying back below 128/USD to end the day relatively unch...
Source: Bloomberg
Bitcoin tumbled today - around the time of a DoJ crypto enforcement headline - after topping pre-FTX levels. Then rebounded significantly after the DoJ announcement was a nothingburger testing back up to $21k. Stocks did not bounce back...
Source: Bloomberg
Oil prices tumbled on not-soft-landing fears after being bid overnight. WTI traded from almost $83 to a $79 handle...
Gold closed marginally lower on the day after a big pump and dump too but held above $1900...
Finally, if you're looking for any more of a squeeze, Goldman notes that its indicator of global positioning and sentiment is back to neutral...
So, a lot less ammo for squeezes.
