Dollar & Yields Soar As Fed-Fears Trump WW3-Worries

Mixed data overnight out of China (GDP beat, Retail sales & Industrial production miss) was matched by an equally divergent day of macro in the US with ugly housing data but strong industrial production, but once again the markets were ping-ponged by Fed fears (rate-cuts-off - Fed Vice-Chair Jefferson and Powell both sang from the same 'higher for longer' hymnsheet with the latter finally admitting that "recent [inflation] data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence") and MidEast tensions (WW3-on, but not yet - Israeli war cabinet plan is 'keep Iran guessing').

All of which pushed 2024 rate-cut expectations lower in the US...

Source: Bloomberg

In fact, the majority of investors now see 2 rate-cuts this year...

The odds of a June rate- cut have tumbled to just 15%...

Source: Bloomberg

...and 2025 rate-cut expectations plunged today - in a crescendo-like surge in volume that suggests stop-outs... (h/t @EdBolingbroke)

Source: Bloomberg

...and pushed the 2Y yield back above 5.0% for the first time since November...

Source: Bloomberg

Treasury yields were 5-6bps higher overall today (together) but on the week, for now, the short-end is slightly outperforming...

Source: Bloomberg

In fact, it's been a wild ride for all yields...

This was posted last Dec when the 10Y was 3.84%. It is now 4.66% https://t.co/rsXhk7MpqV
— zerohedge (@zerohedge) April 16, 2024

Stocks were volatile today amid the surge in yields and Powell's comments, with Small Caps lagging in the red along with a small loss for the S&P and Nasdaq unch. The last minute saw a big sell program hit to ruin most people's day...

Goldman's trading desk summed it up as follows: "Overall feels quiet though market volumes look elevated...skewed around -3% better for sale with LO’s leading more of the supply. "

MS rallied on earnings but BAC did not, with C catching down to GS...

Source: Bloomberg

MAG7 stocks went nowhere today...

Source: Bloomberg

Month-to-date, there seems like differentiation between what's being sold - Defensives and Cyclicals both down equally...

Source: Bloomberg

The dollar was the only other notable mover - rising for the fifth straight day to fresh highs since November - forming a 'Golden Cross' (50DMA crossing above the 200DMA)