Stocks & Bonds Slammed On Stagflation Scares & Tech Tumult

A rebound in costs paid within the Services sector surveys mixed with hawkish feedback from Boston Fed’s Collins to ship the greenback larger and shares, bonds, bitcoin, and gold all decrease. Oil costs bucked the development.

Today’s value motion is in keeping with the market dynamic we have seen play out over the previous few months, characterised by elevated sensitivity to financial information, with fairness markets seemingly adopting a ‘dangerous information is sweet information’ view, rallying on weak progress information, and promoting off on sturdy information – amid fears that too sturdy information will improve the danger of an extra fee hike.

Rate-hike expectations jumped hawkishly larger after Collins advised enterprise leaders in Boston that:

“This phase of our policy cycle requires patience, and holistic data assessment, while we stay the course… And while we may be near, or even at, the peak for policy rates, further tightening could be warranted, depending on the incoming data.”

With Nov odds of a hike leaping from 30% to round 45percentm again as much as the place they had been post-Powell Jackson-Hole speech…

Source: Bloomberg

‘Soft’ (survey) information soared to its strongest since Jan 2022 at present whereas ‘exhausting’ information slumped to its weakest since May 2023…

Source: Bloomberg

So ‘mushy’ survey information is exhibiting value pressures rebounding and ‘exhausting’ information exhibits progress is slowing – smells like stagflation to us.

All of which weighed on shares, dragging all of them decrease with Nasdaq the ugliest horse in at present’s glue manufacturing facility (down round 1%), Small Caps had been the least ugly however all majors indices are decrease on the week (since Friday) with Russell 2000 hammered…

The S&P 500 closed again under its 50DMA (becoming a member of The Dow and Small Caps). Nasdaq discovered assist at its 50DMA at present…

The so-called ‘Magnificent 7’ shares had been slammed at present – the most important drop in a month (not helped by AAPL – hit by stories that China is banning iPhones from goct businesses; and stress on the social media giants from EU regulatory designations)…

Source: Bloomberg

NVDA tumbled again to pre-earnings ranges…

NVDA noticed some modest 0-DTE call-buiying because it began to lose momentum however that was overhwlkemed by put-buying unfavorable delataq stream into the bell…

Source: SpotGamma

0-DTE merchants tried to fade the preliminary dump in AAPL too… then lined earlier than a wave of 0-DTE put-buying despatched the biggest market cap companyt on the planet dramatically decrease…

Source: SpotGamma

Regional banks had been dumped on the again of front-end yields rising (implying an absence of aid on the funding prices entrance)…

Treasuries had been additionally dumped – particularly on the shorter-end – helped by surging oil costs (2Y +7bps, 30Y unch)…

Source: Bloomberg

The yield curve (2s30s) flattened (inverted deeper), reversing the entire payrolls steepening…

Source: Bloomberg

The greenback prolonged latest beneficial properties – to its highest shut since March…

Source: Bloomberg

Crypto was marginally decrease on the day however Bitcoin noticed some loopy (illiquid) strikes intraday because it dived to run stops from final week’s payroll drop then ran stops at $26,000 then dived again down once more…

Source: Bloomberg

Oil costs bucked the broad risk-off development, rising for the ninth straight session to shut at 10-month highs with WTI topping $88…

Gold costs tumbled with Spot falling right down to its 200DMA and discovering assist…

The relative outperformance of oil over gold has pushed the variety of barrels of Saudi Crude per ounce of gold right down to round 20… the place subsequent?

Source: Bloomberg

Finally, as Goldman’s Brian Garrett famous this morning, it has been 91 days for the reason that S&P 500 suffered a 1.5% loss or larger in a day…

That’s uncommon – it has occurred solely 5 occasions within the final 15 years. As we’ve mentioned lately, Sep + Oct are seasonally-volatile months…

…and, on the identical time, Goldman’s index-trading desk highlights the “low-ness” of fairness safety prices.