Big-Tech Bid, Bonds & Bullion Battered As ‘Better’ Data Made Doves Cry

European PMIs screamed stagflation (weaker growth and rebounding prices) but US PMIs unexpectedly ripped (for all the wrong reasons – no longer lead-times are not a sign of demand outstripping supply, it’s a sign of the shitshow in the Red Sea and storm-shutdowns in the US slamming supply chains).

Disruption-driven increases in supplier lead-times are not – we repeat not – a positive… After the debacle during the COVID lockdown supply-chain collapse (and soaring PMIs), you’d think they’d figured this shit out by now!!

Source: Bloomberg

But no one cared to look below the surface. That ‘strength’ sent rate-cut expectations (and the odds of a March rate-cut) reeling hawkishly lower…

Source: Bloomberg

Notably, the market’s expectations for ECB cuts in 2024 has converged with expectations for The Fed (while BoE expectations are pushing notably hawkish)…

Source: Bloomberg

The hawkishness spread to bond-land (not helped by an ugly 5Y auction) with yields up across the curve (long-end underperforming 30Y +4bps, 2Y +1bps) after overnight buying…

Source: Bloomberg

The 5Y briefly broke down below 4.00% ahead of today’s ugly auction but ended 11bps off the lows of the day…

Source: Bloomberg

And that sent bear-steepened the curve (2s30s), dis-inverting it once again…

Source: Bloomberg

And that lack of dovishness slammed gold back below its 50DMA ($2025)…

Source: Bloomberg

The dollar dived overnight buit was bid during the US session…

Source: Bloomberg

The higher yields hit stocks broadly speaking but traders sought the safe-haven of mega-cap tech, enabling Nasdaq to close green. The S&P barely held on to gains as Small Caps lagged (and The Dow closed red)…

‘Most Shorted’ stocks were clubbed like a baby seal today. This is the first day in a week that did not see an afternoon re-squeeze…

Source: Bloomberg

As MAG7 stocks ripped (NFLX) then dipped a bit…

Source: Bloomberg

Bitcoin managed gains, but was unable to hold above $40,000…

Source: Bloomberg

Oil rallied up to one-month highs, breaking out of its YTD range…

Source: Bloomberg

Finally, the big news overnight was China’s surprise RRR cut (after it promised trillions of yuan in rescue for stocks the day before and banned short-selling the day before)…

Source: Bloomberg

…and while 0-DTE traders weren’t playing along, traditional options traders were buying Calls (and covering puts) with both hands and feet today, with someone large stepping in around 1400ET…

Source: SpotGamma

So, is this the inflection point for China?