Bonds & Bitcoin Bid (But Not Stocks) As 'Bad' News Jolts Rate-Cut Hopes Back To Life
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BY TYLER DURDEN
TUESDAY, JUN 04, 2024 - 04:00 PM
Weak labor market data (JOLTS big miss) and mixed Orders (Manufacturing beat, Durables miss) sent 'hard' data to its weakest since the start of the year..
https://assets.zerohedge.com/s3fs-pu...?itok=rYWJyrmm
Source: Bloomberg
...and that 'bad' news was enough to spark another dovish leg higher in rate-cut expectations...
https://assets.zerohedge.com/s3fs-pu...?itok=85sUIaOs
Source: Bloomberg
BUT... and it's a big but, stocks didn't love the 'bad news'. Small Caps were particularly ugly but an afternoon surge lifted the majors green but they could not hold all the gains...
https://assets.zerohedge.com/s3fs-pu...?itok=aHBHQmym
Source: Bloomberg
As David Rosenberg noted on X:
"The fact that equities are not responding well to the renewed pullback in Treasury yields and the swaps market beginning to price in a September rate cut is signaling something important: that stock market investors are also becoming concerned about the economic slowdown and what it means for the earnings outlook."
And as Goldman's trading desk noted, volumes were extremely muted tracking -15% vs the 20dma with S&P top of book down after elevated levels in May.
- Our floor is much better for sale, led mostly by HF longs, although LOs are also better for sale but activity feels muted from the group.
- HFs are selling tech, industrial, and macro products. Important to note they are not better buyers of any sector across our floor today.
- LOs are buying tech + Hcare, vs selling Industrials.
On the other hand, bonds were clear on which direction to head (lower in yield) with the long-end marginally outperforming, and the yield curve flattening (inverting deeper) for the last four days...
https://assets.zerohedge.com/s3fs-pu...?itok=JujTjuim
Source: Bloomberg
The 10Y yield closed at its lowest in two months...
https://assets.zerohedge.com/s3fs-pu...?itok=zxvgVemL
Source: Bloomberg
The dollar whipsawed AGAIN today, spiking overnight, only to be sold during the US session to end flat on the day...
https://assets.zerohedge.com/s3fs-pu...?itok=Tbdfnr3E
Source: Bloomberg
Bitcoin surged back up to $71,000 today...
https://assets.zerohedge.com/s3fs-pu...?itok=Y7a7JjzY
Source: Bloomberg
...after the 15th straight day of net inflows into BTC ETFs...
https://assets.zerohedge.com/s3fs-pu...?itok=goEXk5u2
Source: Bloomberg
Gold slipped back to yesterday's lows (ignoring the dollar's retreat this afternoon)...
https://assets.zerohedge.com/s3fs-pu...?itok=j00xuo8O
Source: Bloomberg
Oil prices plunged back to a $72 handle (WTI) - the lowest in four months...
https://assets.zerohedge.com/s3fs-pu...?itok=RNvt9nGw
Source: Bloomberg
Finally, as economic data continues to underwhelm (ISM Manuf, JOLTs), the US economic surprise index has inflected to its lowest level in 5+ years...
https://assets.zerohedge.com/s3fs-pu...?itok=n-Ghusx4
Source: Bloomberg
..but Goldman's Cylicals vs Defensive pair remains in full growth mode.
Who will be right?
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