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Stocks & Bonds Spike As Growth/Stagflation Scares Soar

Tyler Durden's Photo
by Tyler Durden
Tuesday, Jun 07, 2022 - 08:01 PM

Target was trounced on its inventory "glut" debacle as the bullwhip effect is in full effect... but dip-buyers stepped in (or share-buyback-ers) and put some lipstick on that pig (a pig that is the canary in the coalmine - to mix metaphors - for the rest of the US economy, over-stuffed and under-consumed)

0930ET - the US equity market cash open - was once again an incredibly bullish event as the slow drip of overnight weakness was immediately flipped into a buying-panic that paused briefly around the European close and then re-acclerated to drag the S&P and Nasdaq up 1%, Small Caps +1.5%...

Today's ramp dragged the S&P and Dow back to unchanged from the pre-payrolls level right before Friday's plunge

The correlation regime between stocks and bonds has flipped once again with bond and stock prices rising together today as the impact of rate-locks (due to a heavy IG calendar) are shrugged off)...

Source: Bloomberg

Treasuries were bid across the curve today (except the short-end), erasing much of yesterday's rate-lock surge in yields (2Y +1.5bps, 30Y -7bps)...

Source: Bloomberg

10Y rallied back below 3.00% today, finding support (in yields) at th epeak of the post-payrolls spike from Friday...

Source: Bloomberg

Today's moves in bond-land flattened the yield curve dramatically...

Source: Bloomberg

Rate-hike expectations were very modestly lower today

Source: Bloomberg

The dollar reversed overnight gains as the US equity market opened and ended the day lower against its fiat peers...

Source: Bloomberg

It's been a wild ride from crypto this week. Bitcoin ended the day only modestly lower but managed to scramble back from its death-free-fall overnight in Asia trading, back up near $31,500...

Source: Bloomberg

Gold rallied back above $1850 today...

Oil prices surged again with WTI topping $120 ahead of tonight's API inventory data...

Are we near the end of this epic rally? With a blow-off-top sparking real demand destruction next?

Finally, today was a great day for buying stocks - The World Bank downgraded global economic growth and warned of staglfationary pressures building.. (ya think!)...

Source: Bloomberg

And The Atlanta Fed downgraded US economic growth to 0.9% and stagflationary threats are screaming...

Source: Bloomberg

As US financial conditions have eased in the last two weeks, we wonder - like Nomura's Charlie McElligott - if The Fed will once again jawbone the aggressive inflation-fighting hawkishness and tighten conditions once again...

Get back to work Mr.Powell (though we are not exactly sure wtf you're gonna do now!)

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