‘Better’ Data Sparks Big Bond Bid; Batters Mag-7 Stocks To Trillion-Dollar Tumble

An avalanche of macro data this morning presented a positive blend of updates across growth (better), inflation (lower), and labor markets (looser/worse).

Economic Growth: Real GDP rose 4.9% in 3Q (consensus 4.5%) driven by strong demand across consumer and federal/state government, and inventories. However, a major contribution from inventories could in turn weigh significantly on growth in 4Q
Manufacturing: Orders for Durable and core capital goods also grew by more than expected… thanks to a massive surge in non-defense aircraft orders (so don’t expect it to last).
Housing: Pending home sales rose 1.1% month over month in September, above expectations for a decline… but brace for October to be a bloodbath as mortgage rates re-accelerated.
Inflation: Core PCE prices component of the GDP report rose less than expected.
Labor: Initial and continuing jobless claims both increased by more than expected — a positive for markets which are focused on labor market re-balancing (i.e., could benefit from less wage inflation).

The ECB followed The Fed with a ‘pause’ (as expected), but for now, the monetary policy transmission route of tightening US financial conditions are NOT reaching the economy…

Source: Bloomberg

All of that sent bond yields flying lower (down 8-11bps across the curve)…

Source: Bloomberg

…along with big-tech – which has pushed the Magnificent 7 stocks to a total market cap loss of around $1 trillion in the last two weeks…

Source: Bloomberg

Also, Nasdaq down, yields down…

Source: Bloomberg

…haven’t seen that much recently.

A volatile day in equity-index land today (just look at the scale of those swings) but Nasdaq was always the biggest loser (thanks to GOOGL – and MSFT!) and Small Caps were the prettiest horse in the glue factory (managing to hold on to modest gains on the day)…