‘Growth Scare’ Spooks Big-Tech & Black Gold As Bond Yields Plunge

Macro data continues to serially disappoint, with ADP today confirming labor market stress is starting to build…

Source: Bloomberg

Treasuries were mixed with the long-end dramatically outperforming (30Y -8bps, 2Y +2bps). On the week, only 2Y yields are higher with 5Y unch and the rest of the curve lower…

Source: Bloomberg

…pushing the yield curve flatter/more-inverted…

Source: Bloomberg

…as the bond market is starting to price in a growth scare as long-end yields tumble to their lowest since August…

Source: Bloomberg

Here are five reasons why:

1. Today’s November ADP report was below estimates at 103,000 and showed job cuts in manufacturing. That was in line with Tuesday’s slowing in JOLTS job openings.

2. Traders ramped up bets on ECB rate cuts next year after weak German factory data bolstered the view that it’ll be the first to pivot.

3. Walmart CEO said consumers may not be as resilient next year, even as deflation starts to show, according to a CNBC interview.

4. Oil is moving lower on surging oil exports and as pessimism outweighs stockpile drop.

5. Treasuries sliced through resistance with dealers and international real money buying in long-end Treasury futures ahead of expected money manager demand after next week’s FOMC. Fixed income option flows too remain bullish — skewed towards call structures that target 2% Fed rate by September.

Goldman reassures that “slowing but no recession, disinflation without job losses is what is being priced into the equity markets.”

‘Growthy’ Cyclical stocks remain high as macro and commodities are non-growthy…

Source: Bloomberg

‘Magnificent 7’ stocks faded an initial rally today (despite lower yields)…

Source: Bloomberg

..but ‘unprofitable tech’ continues to rally (on lower rates)…

Source: Bloomberg

…as ‘most shorted’ stocks squeezed higher and hedge fund VIP holding were weaker – punishing them twice…

Source: Bloomberg

But, the last hour saw broader selling pressure which smashed the squeeze back down to unch…

Source: Bloomberg

…and that dragged Small Caps down into the red with the rest of the US Majors today. Nasdaq and S&P were the ugliest horses in the glue factory…

The dollar strengthened against its fiat peers for the 5th time in the last 6 days (closing at 3-week highs)…

Source: Bloomberg

Bitcoin held yesterday’s gains, hovering around $44,000 all day…

Source: Bloomberg

Ethereum was lower on the day, dragging the ETH/BTC cross to its lows in June…

Source: Bloomberg

Gold inched higher (with spot prices finding support at $2020)…

Source: Bloomberg

Oil tumbled for the fifth straight day (8 of last 10 days) with WTI tumbling back below $70 for the first time since early July. Most notably, prices are back below the levels that triggered OPEC+’s big coordinated production cuts in March…

Source: Bloomberg

Finally, financial conditions continue to loosen…

Source: Bloomberg

When will The Fed be forced to intervene as ‘the market’ erases all its hard work?