Bond Yields Blasted To 16 Year Highs; Stocks Sink Ahead Of Fed
Ugly Canadian CPI, surging crude prices (early - on Azerbaijan angst)), mixed housing data, and a trigger happy group of traders anxiously awaiting tomorrow's Fed-sponsored narrative all sparked some chaotic moves in markets today.
The headline-making market of the day is USTs today with a double-barf sending yields 5-7bps higher on the day...
Source: Bloomberg
Which pushed yields to their highest since 2007...
Source: Bloomberg
With bonds at their cheapest to stocks since Oct 2007...
Source: Bloomberg
At the very short-end of the curve, the market has really started to embrace the 'higher for longer' narrative as this year's rate-change expectations have drifted (dovishly) lower (less expectations of more rate-hikes) while next year's rate-change expectations have surged (hawkishly) higher, pricing out expectations of rate-cuts...
Source: Bloomberg
All of which pressured stocks lower - especially longer-duration assets. After Europe closed, the algos tried to lift the major indices back to unch but failed. All the major indices closed red (down 02. to 0.3% on the day)...
CART IPO'd at $30, opened at $42, rallied up to $42.95 before fading the rest of the day...
ARM fell back below its post-IPO opening price...
Regional banks keep falling - now back at SVB tumble lows...
1-Day VIX spiked today (as it tends to do pre-catalyst)
And we note that the world and his pet rabbit appears to be hedge as VIX Call Open Interest soared again...
The dollar chopped around but ended back in the very tight range of the last couple of days...
Source: Bloomberg
Bitcoin bounced back above $27,000...
Source: Bloomberg
Gold (spot) neared $1940 intraday, but ended unchanged...
Source: Bloomberg
Oil prices pumped (to new cycle highs) and dumped (WTI finding support at $90) to end practically unchanged...
Finally, with real yields hitting fresh highs, one wonders when reality hits for equity valuations?
Source: Bloomberg
Consider what kind of shift (down) in real yields it would take to rationalize this valuation (economic depression?)
