Stocks & Crypto Dump, Dollar Jumps Despite Dovish Daly
OPEC rumors and denials, an apparently dovish Mary Daly (but we note Powell has added a speech that was unplanned for 11/30), and soaring COVID cases (and lockdowns) in China all summed up for a bearish day for stocks.
Oil prices puked on WSJ rumors that OPEC+ was considering production hikes (which is just dumb) and sure enough they denied it soon enough and WTI prices rebounded dramatically into the green from a $75 handle all the way back up to an $80 handle...
SF Fed's Mary Daly suggested that financial conditions were pricing in a Fed funds rate of around 6% and that The Fed should slow its roll (lags etc). Eyeballing the chart below comparing financial conditions (blue) to the market's expectations of the terminal Fed Funds rate suggests otherwise, Mary...
Source: Bloomberg
And that's perhaps why stocks never caught much of a bid off those comments.
Finally, China's COVID cases soared, lockdowns spread, and the yuan tumbled...
Source: Bloomberg
Which helped push the dollar higher...
Source: Bloomberg
Which is negative for stocks as the weak dollar has been a prime (bullish) mover for US equities in recent weeks. Nasdaq was the worst performer today, Dow the least worst but all the majors ended the day red...
The massive post-CPI squeeze surge in stocks is almost entirely unwound in "most shorted" stocks...
Source: Bloomberg
US Treasuries ended the day with minimal changes (short-end underperforming the long-end), but swung around intraday quite significantly...
Source: Bloomberg
5Y yields yo-yo'd with oil today, dropping back below 4.00% before bounding back above...
Source: Bloomberg
Before stocks were even moving there was pain in crypto land as the FTX Hacker started dumping ETH. Ether fell from $1220 to $1100 before finding some support...
Source: Bloomberg
Bitcoin also suffered, breaking back below $16,000...
Source: Bloomberg
Gold faded back below $1750...
Finally, the market's rate-trajectory continued to shift notably more hawkish with terminal Fed rate expectations back near cycle highs above 5.08% and H2 2023 rate-cut expectations falling significantly...
Source: Bloomberg
So all that pause/pivot/slow-down hope is dashed... despite Daly's comments today.
