Bitcoin, Breakevens, & Big-Tech Breakdown As Inflation Batters Bond Bears
With a non-stop barrage of hawkish FedSpeak today, following record high PPI, no one should be surprised that stonks shit the bed as the realization dawns that any Powell Put is struck considerably lower than this and the game of chicken continues. Nasdaq wasa clubbed like a baby seal today, down over 2.5% (from up almost 0.5% after PPI). The S&P fell 2%, Small Caps -1% and even The Dow was dumped into the close…
Big-Tech tumbled today and so did bond-yields. The most risky, longest-duration stocks suffered most…
Source: Bloomberg
Nasdaq’s crusade lower continued after a 3-day respite ramp test to its 100DMA and fail and the S&P broke back below its 50DMA…
The Market to The Fed…
Treasury yields were all lower today with the belly of the curve outperforming (5Y -5bps, 2Y and 30Y -3bps). Notably, only 2Y yields are higher on the week, with 30Y -7bps…
Source: Bloomberg
30Y Yields broke below 2.05%, back to one-week lows…
Source: Bloomberg
The yield curve has flattened notably, now flatter on the year…flashing some red ‘policy error’ flags…
Source: Bloomberg
And Breakevens slipped to 3-week lows…
Source: Bloomberg
Rather more worrisome is the fact that Mortgage Rates are soaring (as the market’s biggest buyer steps back) despite TSY yields not chasing…
Source: Bloomberg
The dollar continued to slip further below its 100DMA, its lowest since early November…
Source: Bloomberg
Cryptos took another beating today with bitcoin sliding back from $44k…
Source: Bloomberg
Oil was down today with WTI back below $82…
And gold tumbled early but caught a bid back above $1820…
Finally, in case you really thought you would call The Fed’s bluff, QE shrinks by $20BN to $40BN in period Jan. 18-Feb 10…
It will then shrink another $20BN and end by mid-March when the Fed will hike…
Source: Bloomberg
And if we believe the Taylor Rule, The Fed is 1000bps to easy right now…
Source: Bloomberg
But, if STIRs are right, it may stop hiking rates by year-end… but QT will continue?
Tyler Durden Thu, 01/13/2022 – 16:00
