Powell's Panic-Relieving Presser Calms Hawkish Havoc But Yield Curve Crumbles

Hawkish havoc was unleashed briefly and then the man of steel stepped up...

The Initial Euphoric/Dysphoric reactions to Powell's rate-hike and hawkishness (Dollar spike, stocks down, yields higher, yield curve plunge, EM dump), but everything turned around during Powell's Presser.

In his presser, Powell reminded investors that despite the hawkish interpretation of today's meeting and his confident view of the economy, the economy is not yet overheating. Powell says "there is no sense in our forecasts'' that inflation will take off. "If we thought inflation would take off, we would be showing higher rates.''

Also tomorrow's ECB meeting now looms and likely takes the shine off some positioning.

But by the close - stocks were back at the lows of the day.

Small Caps clung to unchanged from the FOMC statement, but the broader markets all retreated...

 

All major equity indices were lower on the day... knocked lower the China tariffs headline...

 

Tech and Financials exchanged roles after the Fed...

 

"Most Shorted" stocks were flat today but the following chart indicates just how insane a squeeze they have seen the last few weeks...

 

Yields were all higher on the day but well off their post-Fed highs...

 

10Y briefly tagged 3% then tumbled back to almost unchanged on the day...

 

The entire yield curve tumbled flatter...

 

The yield curve plunged to fresh cycle lows with 5s30s now within 1 rate hike of inversion...

 

The Dollar Index broke out intraday after the hawkish Fed from its recent extremely narrow range but quickly fell back to close red...

 

EM FX ended the day higher despite chaos surrounding The Fed statement...

 

Cryptocurrencies had another awful day...

 

Silver surged as the dollar fell back during Powell's presser and WTI gained after s surprise crude draw reported by EIA...

 

WTI Crude ripped higher off $66 as the inventory data hit..

 

Silver surged above $17 and gold scrambled back above $1300...

 

Which sent Gold/Silver tumbling...

 

 

Comments

Francis Marx Wed, 06/13/2018 - 16:03 Permalink

 How does one make sense of this. Everyone knew they were going to raise rates? What wait till the last minute to sell. You really have to laugh at the the whole ta-boggle.

Al Huxley Wed, 06/13/2018 - 16:04 Permalink

GOLD fans should be ECSTATIC!  Did you see that CLASSIC DUMP AND PUMP - CRASHED to 1293, and then SOARED definitively over 1300.  AND HELD it!! We're now WELL over 1300!  Got as high as 1301!!!  Gold bulls rejoice, the time is NOW.  And look at the miners - still stealthily biding their time, WAITING TO POUNCE!!!

Harry Lightning Sonny Brakes Wed, 06/13/2018 - 23:38 Permalink

When in Rome do as the Romans do. Doesn't matter if its Fiat or Aston Martin, as long as everyone accepts it then its the only game in town. After 45 years of being off the gold standard, if the world was going to reject the fiat part of fiat currency they would have done it by now.

The problem for the "fiat currency is shit" crowd is they onlyh focus on the phrase "full faith and credit". In fact currency value and acceptance is linked to the subtle yet real characteristic of all national currencies insofar as those currencies actually represent the economic strength of the country that issues them. That's what really backs currency, the assurance that the unit is accepted for all transactions of barter and finance within the country of issuance. Thus, as a country's economic strength ebbs and flows, so too does the value of its currency, the currency is a mirror image of that economic performance. 

And that's why you can yell "fiat" at the top of your lungs in the village square and no one will listen. Because they know that the currency is actually backed by something real, it is a store of value for the economic performance of the country that issued it.

 

In reply to by Sonny Brakes

Harry Lightning NAchodwarf Wed, 06/13/2018 - 23:44 Permalink

Not really. The Fed always is wrong about where the US economy is going, and they are wrong now as well. To think that inflation will remain steady at present levels as unemployment drops to 3.6% is completely without merit, and the market should have taken that projection from the Fed on Wednesday as an insult to their collective intelligence. 

Maybe they are waiting to see the whites of the eyes, but there's one thing I don't have to wait to find out. That is this : if the unemployment rate drops as much as the Fed projects while they keep tightenoing as much as they say they will be, then inflation is going to be a lot stronger than they think. And conversely, if inflation stays where it is today while the Fed tightens as much as they say they will, the unemployment rate will not be anywhere near 3.6%, but markedly higher. 

My bet is that inflation rates fall as the unemployment rate moves higher, with each Fed tightening move making a bigger impact on that scenario.

In reply to by NAchodwarf

D.r. Funk Wed, 06/13/2018 - 16:05 Permalink

Ha ha. manipulators:
couldn't keep the nasdaq up
couldn't keep the nasdaq floating the other indexes
couldn't avoid a down-day being had by bears or reality in general

930-1130 NASDAQ WAS PURE PROGAMMING-BS

AND

MAYBE? JUST PART OF THE TRICKS&ANTICS?

SINCE

THE CRACK? WITH THE HEADLINE-CONVERGENCE? COMING?

YEAH? ! ? !

 

Chupacabra-322 Wed, 06/13/2018 - 16:06 Permalink

**BREAKING**

Exclusive: Tommy Robinson is being shipped to a high-security, Muslim-majority prison in which he’ll be released to the general population despite inmates already making death threats against him, according to Robinson’s spokesman Caolan Robertson.

 

Robinson’s transfer comes not long after thousands of UK residents protested the his arrest and imprisonment for reporting on a Muslim grooming trial.

 

https://www.infowars.com/tommy-robinson-shipped-to-high-security-muslim-prison-to-be-released-to-general-population/

 

If Tommy dies in Prison the English government will have the people to worry about.

The British are about to get the wake up call of their life and they don’t even realize it.

rejected Wed, 06/13/2018 - 16:17 Permalink

The picture of Powell as the man of steel more correctly should be depicted as Jesus ascending to heaven. Remember, they are doing Gods work.... 

tictawk Wed, 06/13/2018 - 16:33 Permalink

Credibility like virginity can only be lost once.  The Fed has resorted to QE1,2,3 and considering that they have easy money at the slightest sign of economy slowing.  So it not a stretch for the market to think that the next step is more easing.  The Fed has proved that it’s a one trick pony and no credibility