“I Love The Smell Of Liquidation In The Morning…”

Economic data this morning was mixed enough to perhaps be goldilocks for The Fed (better than expected claims data and Empire Fed survey trumped by weak and revised down retail sales, weaker industrial production, and falling capacity utilization): not bad enough to warrant a pause and not strong enough to encourage The Fed to hike 100bps next week. This sent Sept odds of a 100bps hike down, but odds of a 75bps hike in Nov higher…

Source: Bloomberg

But saw overall rate-hike expectations tighten further…

Source: Bloomberg

Additionally, with traders facing $3.2 trillion of options expiration and the beginning of the buyback-blackout window tomorrow, it is perhaps not surprising that we puked hard today as derisking was the name of the game and the early action had the stench of liquidation across many markets.

The Nasdaq was the day’s worst performer, down 1.7% with The Dow the prettiest horse in the glue factory (down 0.5%)…

Interesting that this morning saw a quick and hard 3effort to ignite a short-squeeze… but that failed really fast…

Source: Bloomberg

Treasury yields were higher on the day but the long-end significantly outperformed while 2Y blew out further…

Source: Bloomberg

The yield curve (2s30s) continued to invert even deeper (its most inverted since Sept 2000)…

Source: Bloomberg

The dollar drifted modestly higher…

Source: Bloomberg

Helped in large part to a puke in Chinese yuan (back above 7/USD once again)…

Source: Bloomberg

The Canadian Dollar tumbled to pre-pandemic plunge levels today…

Source: Bloomberg

Crypto was dumped across the board with Ethereum hit hardest – after its successful ‘Merge’ – back to $1500 (3 week lows)…

Source: Bloomberg

Spot Gold prices were monkeyhammered even deeper below $1700 to their lowest since April 2020…

Source: Bloomberg

For the gold-bugs, let’s hope real-yields are being mispriced here…

Source: Bloomberg

WTI Crude tumbled lower on the day…

And finally, how does S&P 500 at 2000 sound?

Source: Bloomberg

Or Nasdaq 10,000 in the short-term?

Source: Bloomberg

Still think The Fed would never allow that?