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It was not a pretty day for global sentiment as German investor confidence crashed to its weakest since 2011’s EU debt crisis and then the US NFIB Small Business Outlook hit a record low. Heading into tomorrow’s CPI print, global stagflation appears to be accelerating (inflation is consistently hotter than expected and economic growth weaker than expected)…

Source: Bloomberg

Rate-hike expectations have fallen for the last two days…

Source: Bloomberg

And rate-cut expectations for Q1 2023 are now back at 13bps…

Source: Bloomberg

Bonds were bid today (with the belly outperforming 7Y -5bps)…

Source: Bloomberg

Despite an ugly auction (2bps tail), 10Y Yields held below 3.00% (and below the payrolls yield spike lows)…

Source: Bloomberg

The shift sent the yield curve (2s10s) tumbling to its most inverted since 2007…

Source: Bloomberg

Perhaps more notably the 3M10Y spread is collapsing…

Source: Bloomberg

Stocks were weaker overnight, rallied into the US cash open then dumped and pumped into the European close and stabilized. Then at 1500ET a massive sell program hit and all the majors puked hard…

There was no obvious catalyst for that puke but a fake CPI press release had been floating around for hours and some claimed that triggered it (we doubt that)…

So this “market” now moves off a fake CPI print which algos only noticed 3 hours after it first hit https://t.co/z6lQUe3Gzu

— zerohedge (@zerohedge) July 12, 2022

Notably it appears this liquidation-like move started in crypto as Bitcoin turned down first (barely) and then Nasdaq followed…

Source: Bloomberg

This was the biggest ‘sell program’ in two weeks (which were among the biggest sell programs in history)…

Source: Bloomberg

The euro touched parity with the dollar overnight, perfectly hitting 1.0000 before bouncing…

Source: Bloomberg

There was interesting action as traders tested down towards parity. Every time the euro dived, Gold was bid (implicitly short USDs and supporting the euro). Then once Europe was closed, the Euro and gold slipped lower…

Bitcoin tumbled back below $20k, testing down to $19500…

Source: Bloomberg

WTI tumbled over 8% today, breaking back below $100 near last week’s lows…

…and continues to test toward its key 200DMA…

Source: Bloomberg

And finally, don’t forget tomorrow’s CPI. For four of the last 5 months, the S&P 500 has fallen by an average 0.78% on CPI day…

Source: Bloomberg

CPI has been hotter than expected for the last 5 months and The White House has been dutifully front-running in terror making us wonder if tomorrow will make it 6 in a row.