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Stocks, Bonds, Bullion, & Black Gold Battered As 'Soft Landing' Hopes Fade

Tyler Durden's Photo
by Tyler Durden
Monday, Dec 05, 2022 - 09:00 PM

Futures drifted gently lower overnight despite Chinese stocks rising on COVID-restriction-lifting rumors but then got bitch-slapped down by Fed whisperer Nick Timiraos pushing the 'higher rates for longer' narrative to walk back some of the market's post-Powell exuberance. That sent bonds and stocks lower and terminal Fed rate expectations higher.

A mixed bag in the Services surveys (PMI down hard but ISM higher somehow) and Factory Orders rose more than expected, prompted another leg down in stocks and higher in terminal Fed rate expectations (back above 5.00%)...

Source: Bloomberg

So The Fed will hold rates 'higher for longer' as 'good' economic news remains too strong... not a good sign for the 'soft landing' narrative.

All of which prompted an ugly session in stocks with the S&P and Nasdaq down 2% (Small Caps worst of the majors on the day, down 3%)...

"Most Shorted" stocks tanked today with no squeeze attempt at all...

Source: Bloomberg

Bear in mind that the S&P is down for 6 of the last 7 days (the only winning day was after Powell spoke last week). The Dow and Small Caps are now only up 0.5% from before Powell's address...

The S&P broke down below its 200DMA...

VIX traded back above 20 today but remains dramatically low relative to realized vol...

Source: Bloomberg

Bonds were also dumped today with the belly of the curve dramatically underperforming (5Y +15bps, 30Y +6bps)...

Source: Bloomberg

The 2Y Yield pushed back up to Friday's post-payrolls spike highs (still well down from pre-Powell)...

Source: Bloomberg

The yield curve (2s10s) flattened to a new inversion low for this cycle (the most inverted since 1981)...

Source: Bloomberg

The dollar surged back above Friday's spike highs...

Source: Bloomberg

Bitcoin rallied up to $17500 overnight, only to give it all back, trading back below $17k...

Source: Bloomberg

The dollar strength (and hawkish sentiment) hit Gold, which tumbled back below $1800...

A massive roller-coaster of a day for crude prices as China COVID easing, OPEC headlines, and Russia price caps all combined with a string dollar and hawkish sentiment to pump and dump WTI to $83 and back down to $76 handle...

Finally, are we heading back down?

Source: Bloomberg

No way, right?

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