Dovish Fed & Dismal Job-Revisions Send Bonds, Big-Tech, Bitcoin, & Bullion Higher

‘Bad news’ – a record downward revision in payrolls – combined with a strongly ‘dovish’ bias to the FOMC Minutes sent rate-cut expectations soaring today…

Source: Bloomberg

…dominated by 2024 dovishness – dramatically more than The Fed’s single-cut expectation…

Source: Bloomberg

…and that sparked a buying-panic in bonds, bitcoin, stocks, and gold (but the dollar and crude tumbled).

Stocks and bonds are (arguably) disagreeing…

Source: Bloomberg

Stocks initially surged on the BLS bad news and Dovish Fed, but some reality started to set in again that ‘growth scares’ are real enough to have prompted The Fed to consider a July cut and now a September cut seems locked in.

The market was completely confused at what to do with the payrolls revisions at first – which were delayed (but leaked to several banks).

Small Caps led on the day (big short squeeze) but the rest of the majors ended up giving gains back. The last ten minutes of the day saw the machines back in charge, lifting stocks off unchanged…

Small Caps gains were once again on the back of a major short squeeze…

Source: Bloomberg

Mag7 stocks went nowhere for the second day, stalled at the pre-payrolls highs…

Source: Bloomberg

VIX rose for the second day in a row, back above 16…

…and worse still, VVIX (the real fear gauge) extended its bounce back above the 100 Maginot Line…

Source: Bloomberg

Treasury yields tumbled today with the short-end outperforming (2Y -6bps, 30Y -1bps). The entire curve is now below pre-CPI levels of yield…

Source: Bloomberg

…smashing the 2Y yield back below 4.00% (having stalled at pre-CPI high yields)…

Source: Bloomberg

That steepened the yield curve significantly, erasing the flattening post-CPI…

Source: Bloomberg

The dollar continued to dump, hitting 5-month lows…

Source: Bloomberg

Bitcoin surged back above $61,000 (helped by potential short squeeze)…

Source: Bloomberg

Gold rallied after the Fed Minutes, having been stomped back below $2500 (once again near The London Fix) earlier in the day…

Source: Bloomberg

Crude prices tracked bond yields lower, with WTI dropping to a $71 handle…

Source: Bloomberg

Finally, is Harris’ honeymoon ending?

Source: Bloomberg

Source: Polymarket

Prediction markets are trending back towards Trump.