Bond Bloodbath Batters Big-Tech, Sparks Bid For Banks

2022’s bond bloodbath continued today with 30Y smashing up to 2.10%…

Source: Bloomberg

This is the biggest 2-day surge in yields since the chaos in March 2020 amid the bailouts. It was all going so well…

30Y Yields blew through their 50-, 100-, and 200-DMAs…

Source: Bloomberg

Banks have been manically bid on the bear-steepening curve as big tech was dumped…

Source: Bloomberg

As rates continued to soar, long-duration growthy stocks were clubbed like baby seals… most especially unprofitable tech stocks tumbled to their lowest since Oct 2020…

Source: Bloomberg

Nasdaq was the day’s biggest loser, erasing all of yesterday’s gains. The S&P was unchanged and Dow was the biggest winner on the day…

Intraday, Nasdaq bounced back above its 50-DMA

But as Real Yields rise, Nasdaq (growth heavy) has a lot further to fall relative to Small Caps (value heavy)

Source: Bloomberg

For the second day in a row, ‘recovery’ stocks ripped higher at the open, then faded relative to ‘stay at home’ stocks…

Source: Bloomberg

Yesterday’s short-squeeze was unwound today…

Source: Bloomberg

Overall, it was a mixed day for bonds with the long-end significantly underperforming and more bear-steepening (2Y -1bps, 30Y +6bps)…

Source: Bloomberg

The yield curve has steepened all the way back to the Powell Pivot…

Source: Bloomberg

Bitcoin started the day off to the upside but rejected its 200DMA once again and dived to its lowest ‘close’ since Oct 2020…

Source: Bloomberg

The dollar managed modest gains today, finding support at its 50DMA once again…

Source: Bloomberg

Oil prices rallied ahead of tonight’s API inventory data, erasing all the post-Omicron losses…

Finally, in case you were wondering why mega-cap Tech is suddenly puking, Bloomberg notes that the P/E ratio of the S&P 500’s 10 largest stocks is trading near a level that marked the implosion of the dot-com bubble two decades ago.

Source: Bloomberg

Elevated valuations combined with a potential rise in bond yields and risk of slowing growth make equities more vulnerable to corrections. And with the S&P 500 Index’s top 10 biggest companies comprising nearly a third of the gauge’s total weighting, any retreat in these market behemoths could fuel a dip in the entire market.

Additionally, bond vol is at its highest relative to stock vol since 2019…

Source: Bloomberg

So where is the safe-haven?

Is Byron Wien going to be right about gold in 2022?

And it wouldn’t be fair if we didn’t show this…

Is omicron “nature’s vaccine”?