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Fed Taper Sparks Best Week For Bonds, Stocks, & Gold In Over 6 Months

Tyler Durden's Photo
by Tyler Durden
Friday, Nov 05, 2021 - 04:01 PM

Well that escalated quickly. The Fed finally unveils its Taper and investors decide that is the perfect time to buy stocks with bonds hands and feet, and pile into bonds again...

...and rotate back from crypto into gold...

But, for stocks, Greed is good...

Small Caps outperformed dramatically this week (best week since March) with a big squeeze at the cash open every day. Nasdaq also surged with its biggest week since Feb (up 5 straight weeks and 10 straight days). The S&P and Dow also made gains on the week with record highs all around...

While stocks closed higher today, they were much more choppy than they have been all week (with the Russell/Nasdaq pair rotation playing out again)...

This latest move has been enabled by 7 straight days of short-squeezing. This was the biggest weekly short-squeeze since January...

Source: Bloomberg

Tech and Consumer Discretionary outperformed this week as Healthcare and Financials ended the week lower...

Source: Bloomberg

Semis soared this week (its best week in a year), up 7 days in a row, up 4 weeks in a row, and i snow at near record high levels of overbought...

Source: Bloomberg

But this might just be the vinegar strokes (Google it), before reality reasserts itself...

Pfizer made the big headlines of the day with its 'miracle' COVID pill. That crushed MRNA and MRK...

Source: Bloomberg

And finally, there's TSLA, which is now larger than the entire S&P Energy sector...

Source: Bloomberg

VIX pushed back above 16 today, after trading with a 14 handle immediately after The Fed taper statement...

The yield curve bull steepened on the week with yields down across the curve but the belly significantly outperformed (30Y -6bps on the week, 7Y -15bps, 2Y -10bps)...

Source: Bloomberg

The 30Y yield spiked above 2.00% on the taper, then puked back below 1.90% to its lowest yield in 6 weeks...

Source: Bloomberg

5s30s ended steeper on the week but started to flatten after the initial kneejerk of the taper news...

Source: Bloomberg

Real yields plunged this week...

Source: Bloomberg

Powell's jawboning has done its jobs as market-implied rate-hike odds slipped lower (though notably the moves were not exactly regime-changing and are still far more hawkish than The Fed's dotplot)...

Source: Bloomberg

The 'policy error' positioning is back on the table.

The dollar ended higher (barely) for the second straight week, giving back most of the week's gain this afternoon...

Source: Bloomberg

Cryptos were mixed on the week with bitcoin slightly lower and Ethereum slightly higher

Source: Bloomberg

Gold had its best week since May, surging back above $1810 after plunging on The Fed taper news...

On the other end of the spectrum, oil prices plunged this week - WTI's first weekly loss since August - even with a decent bounce today (as $80 seems to be support)...

For now, this is the best year for commodities since the oil crisis...

Finally, we note that national average gas prices are almost as high as they have ever been...

Source: Bloomberg

But that hasn't stopped investors shifting to "Extreme Greed" in their appetite for stonks...

And Nasdaq's recent rise puts it near its most overbought in five years...

Source: Bloomberg

The RSI is 4 for 4 in calling a decent drawdown from this level of overbought.

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