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Bonds, Bullion, & Black Gold Soar As CPI & Brainard Pump’n’Dump Stocks
Bonds and stocks rallied hard out of the gate after core inflation printed lower than expected (even as the headline print soared).
As Goldman explains: “today’s CPI release is a reminder that there still exists a non-zero probability that all of the inflation we have seen the past year is indeed transitory – the product of pandemic imbalances that constrained supply chains, kept people out of the work force, and fed an unusual consumer demand for stuff.”
But, it wasn’t long before FedSpeak spoiled the party (for stocks) however as Lael Brainard’s comments that there’s plenty of room to trim job openings here (via Fed tightening) and reiterated The Fed’s commitment to fighting inflation no matter what, sent long-end bond yields higher and stocks lower around 1215ET (and the dollar higher).
Brainard really stole the jam out of the equity market’s donut today with Nasdaq surging up 2% after CPI (from -0.5% overnight) to down almost 1% by the close as the rest of the majors dumped on The Fed saying nothing new after the CPI Pump. Small Caps managed to hold very modest gains
Another day, another failed short-squeeze…
Source: Bloomberg
FANG stocks were clubbed like a baby seal again today with Alphabet and Meta Platforms down for a sixth straight session, the longest streak of daily declines since May 2019.
Source: Bloomberg
Treasury yields were mostly lower on the day with only the long-end higher as the belly outperformed (dramatically – 30Y +1bps, 5Y -13bps)…
Source: Bloomberg
This – of course – sent the yield curve dramatically steeper (3s10s, 5s10s, and 5s30s all uninverted today)…
Source: Bloomberg
However, the 2s10s curve is still inverted 1Y forward…
Source: Bloomberg
The 10Y Yield reversed dramatically (-16bps from intraday highs) after tagging its multi-decade downtrend resistance level of 2.83%…
Source: Bloomberg
Interestingly, rate-hike expectations fell today modestly while the subsequent rate-cut expectations also fell…
Source: Bloomberg
The dollar dumped on the CPI print as un-hawkish narratives quickly hit, but once Brainard reminded the world that The Fed is on a mission, the USD surged back to the highs of the day…
Source: Bloomberg
Bitcoin bounced back above $40k overnight but then as the US session progressed, the crypto slipped back below…
Source: Bloomberg
Oil prices rose today as China lifted some of its COVID restrictions, with WTI back above $100…
Gold also extended gains (despite USD strength) with the barbarous relic back at one-month highs…
Finally, it’s all PutInflation… 17 Nobel prize winning economists agree we are sure…
Source: Bloomberg
Saying anything else is anti-science!!
Tyler Durden
Tue, 04/12/2022 – 16:01
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