Bond Bloodbath Trounces Tech; Batters Bitcoin, Banks, & Bullion

A central bank smorgasbord started the day off with a bang of confusing cross-currents (SNB/BOE unch; Riksbank/Norges hiked and hawkisher; and Turkey hiked in line) – all sending the dollar higher further. Domestically, just as much confusion: a hot labor market (claims plunging), and inflation fears rising (Philly Fed prices paid), along with housing getting hammered (existing home sales slump).

But it was still The Fed that was on everyone’s mind, and the market’s expectations for rate-cuts next year are quickly be reduced from over 6 rates cuts implied in July to around 3 cuts in 2024 now…

Source: Bloomberg

We suspect it may need to go lower than that (fewer cuts still).

Treasuries were mixed (basically some giveback to yesterday’s moves with the short-end outperforming – 2Y -3bps, 30Y +11bps), but combining the two days, all yields are still significantly higher…

Source: Bloomberg

…leaving the yield curve (2s30s) steeper (less inverted)…

Source: Bloomberg

For context:

2Y yields hit their highest since July 2006
5Y yields highest since Aug 2007
10Y highest since Nov 2007
30Y highest since April 2011

Source: Bloomberg

All of which weighed on stonks with the longest-duration (tech) hit hardest. Nasdaq is down over 3% post-FOMC. The Dow was the least ugly horse in the glue factory and is down almost 2% post-Powell…

As we detailed earlier, the key level to watch is the medium-term momentum threshold of 4353, below which the CTA community will start to flip negative and selling will accelerate…