Bonds & Bitcoin Bid As Kashkari & Crude Slam Stocks
An armada of FedSpeak today was pretty much all in the same direction - need more time on inflation, no rush to cut (but will cut), jobs strong - with the only divergence being the degree (Gooslbee, more dovishly worried about labor market due to rising delinquencies; to Kashkari, more hawkishly questioning any need to cut rates at all given how economy is doing).
In order of their appearance:
*BARR: BANKS' OFFICE COMMERCIAL REAL-ESTATE ISSUES TO TAKE TIME
*KUGLER: `SOME LOWERING' OF RATES THIS YEAR LIKELY APPROPRIATE
*FED'S HARKER SAYS INFLATION IS STILL TOO HIGH
*BARKIN: FED HAS TIME TO GAIN MORE CLARITY BEFORE LOWERING RATES
*GOOLSBEE: WORTH STAYING ATTUNED TO DETERIORATION IN JOBS MARKET
*KASHKARI: QUESTION OF WHY CUT RATES IF ECONOMY REMAINS STRONG
*MESTER: NEED MORE PROGRESS ON HOUSING, CORE SERVICES INFLATION
Everything was going swimmingly early on. Stocks saw jobless claims data and algos greenlit the buying panic (read all about the farce that is jobless claims here).
The gains survived the various Fed speakers early on until Kashkari spoke and hinted at the potential of no rate-cuts and that seemed to trigger a wave of selling in stocks.
“In March I had jotted down two rate cuts this year if inflation continues to fall back towards our 2% target,” Kashkari said in a virtual event with LinkedIn on Thursday.
“If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all.”
The decline in stocks also corresponded with a surge in oil prices driven by headlines around UAE cutting ties with Israel and Israel putting all of its global embassies on alert...
Source: Bloomberg
WTI topped $87 intraday...
Source: Bloomberg
Brent also topped $91 for the first time since Oct 2023...
Source: Bloomberg
It was an ugly day overall in stocks (among the ugliest in a while) with everything sliding from gains near 1% to losses near 1.5%. Nasdaq was the laggard (but basically everything was dumped together)... Small Caps and The Dow are down over 3% on the week..
"Most Shorted" stocks were monkey-hammered...
Source: Bloomberg
...and MAG7 stocks were pummeled after a strong open...
Source: Bloomberg
Everything fell at the same time - around the crossover of Kashkari's comments and oil's spike but we note that bond yields also tumbled (odd given oil's rise - inflation - and Kashkari's comments, hawkish)...
Source: Bloomberg
Are bonds suddenly fearful of an oil-price-spike-induced recession? Rate-cut expectations also rose (back to 3 cuts in 2024)...
Source: Bloomberg
Also suggesting this was more an oil story than a Fed story.
Crypto had a huge day, erasing all of Tuesday's tumble, back above $69,000...
Source: Bloomberg
Gold hit a new record high for the sixth day in a row, above $2300 (spot) for the first time before selling off late in the day...
Source: Bloomberg
As crude soared today, so wholesale gasoline prices hit their highest level in seven months, leading pump prices ever higher...
Source: Bloomberg
Finally, which comes first? S&P 4800 or 10Y 3.5%?
Source: Bloomberg
We suspect we will see whether this mini-reversal is sustained after 0830ET tomorrow morning.
