Dollar Dumps, Yields Jump On Biggest Stock Short-Squeeze In 5 Months

Worst Is First! What goes down, must go back up, right? Perhaps it's better not to play...

 

Chinese stocks were weak overnight, led to the downside by the tech-heavy Shenzhen Composite...

 

And Europe is doing the exact opposite again - soaring for the second day in a row...

 

Nasdaq managed to get back to even, erasing yesterday's tech wreck...Trannies soared over 3.5% today, Small Caps up almost 3%!! And the late-day melt-up sent S&P back above 2800. The Dow ended the day up 511 points!

 

This doesn't feel sustainable...

 

And just like that the S&P 500 retakes 2800...

 

Nasdaq was the most oversold before the open since the Dec lows...

 

S&P pushed back above the 200DMA...

 

This is the best day for stocks in 5 months, on the back of the biggest short-squeeze since the first week of 2019...

Volume was below average.

FANG Stocks bounced today but only recovered 50% of their last few day's losses...

 

Semis soared (2nd best day of year) filling the gap back to May 23rd...

 

Financials spiked most in 5 months, but struggled to break resistance from last week...

 

While equity vol is elevated, FX vol is deadstick as bond vol explodes...

 

Treasury yields surged on the day, with 30Y notably underperforming and running higher (in yield) on the week

 

Note we started the day aggressively oversold in yields...

 

With a steepening in the curve, 3m10Y erasing yesterday's flattening (but remains inverted)

Note, at the longer-end, 2s30s now at 14-month highs...

 

The Dollar index tumbled to 3-week lows - down 4 days in a row - erasing all gains since the May FOMC meeting...

The Mexican peso rallied today but only retraced 50% of the Trump tariff drop...

 

Rather oddly, the dollar was weak as market-implied rate-change expectations shifted more hawkishly, despite all the chatter from various Fed heads...

But rate-cut expectations for September have soared to 89%!!! (NOTE: in early November, the market was 89% sure that The Fed would be hiking rates in September)

 

Bitcoin was beaten like a rented mule again...

 

As all cryptos extended overnight losses...

 

Commodities were all higher today as the dollar dropped...

 

Gold managed to hold on to gains (in USD and CNY) amid all the chaos today...

 

Oil also gained on the day amid the dollar dump (ahead of tonight's inventory data)...

 

Finally - one word - fun-durr-mentals...