Dollar, Oil, & Gold Jump; Stocks & Bonds Dump As 'WW3-On'-Risk Reignites
It was all looking so shiny and BTFD-y - Iran had sent some missiles towards Israeli folks; 'allies' blocked 99% of them; and Israel appeared unlikely top respond 'imminently'. Stocks were up, crypto was up, oil was down as 'WW3-off' meant risk-on.
But, then the headlines just kept coming from the MidEast, reigniting fears that things were about to escalate quickly once again, sending oil, gold, and the dollar roaring higher.
Add to that the fact that 2Y yields surged up towards 5.00% (after strong nominal retail sales) and 'risk-off' rapidly spoiled the overnight dip-buyers' fun.
Specifically, 5.00% has not been a fun place for S&P 500 multiples in the last couple of years...
Source: Bloomberg
...and it appears the same it true for now with the majors reversing solid early gains into serious weakness as the day unfolded. Nasdaq and Russell 2000 were the day's biggest losers, swinging from almost 1% gains to 1.5% losses by the close...
This was the biggest two-day drop for the S&P 500 since March 10th 2023 (SVB)...
Interestingly, 0-DTE traders were aggressively buying calls into this plunge in stocks (as it appeared they forgot that the buyback desks are currently in blackout and unavailable to rescue them)...
Banks remain very mixed with Goldman soaring today after earnings but JPM still holding big losses since its Friday earnings...
Source: Bloomberg
'Most Shorted' Stocks staged the ubiquitous squeeze attempt at the open but were sold pretty consistently from that point on -to close at their lowest in over two months...
Source: Bloomberg
It wasn't just the small-stocks that got hit. The basket of MAG7 stocks puked pretty hard, echoing the Thursday glitch from the week before last...
Source: Bloomberg
Bonds were ugly, but before we go there, we note that stocks did end-up playing catch-down to their reality today...
Source: Bloomberg
Treasuries were sold across the board today with the long-end hardest hit (30Y +11bps, 2Y +4bps)...
Source: Bloomberg
...which implicitly bear-steepened the yield curve (2s30s), erasing all of the CPI flattening...
Source: Bloomberg
The dollar roared back up to its highest since Nov 13th - this is the biggest 4-day gain since early Feb 2023...
Source: Bloomberg
Crypto continued its roller-coaster ride, surging overnight (HK BTC ETFs?) back up to $67,000 (erasing the weekend's plunge on the Iran attack on Israel) and then falling in line with Nasdaq as the equity selloff accelerated.
Source: Bloomberg
Oil prices roared back from earlier weakness with Brent back above $90 and WTI topping $85
Source: Bloomberg
Gold dropped early on after the retail sales print, but then ripped back as war-premium was added back...
Source: Bloomberg
Schwab Global Investment Stratgeist Jeff Kleintop noted gold's extraordinary 'war' gains in a post on X:
Gold has been soaring with a more than 14% gain so far this year. Prices hit an all-time high of $2,448.80 per ounce intraday on Friday as investors braced for a further escalation in the Middle East - a far larger gain than what usually accompanies a geopolitical event.
A few reasons beyond geopolitics:
Investors remain wary of lingering inflation in the US and may be seeking gold as a hedge.
The even stronger 20% move up in silver this year, the most AI chip exposed metal, may also be helping.
India's economy continues to boom, boosting gold jewelry demand in the world's top gold consuming country.
Finally, don't forget it's Tax Day today...
Source: Goldman Sachs
Which seasonally is the low of the month...
