Bonds & Bitcoin Soar On Week As Dismal Data Drives Dovish Dive In Rate-Hike Odds

After a brief bounce, US Macro data returned to its “worse than expected” trend this week with ugliness in PMIs, initial jobless claims, Housing data (homebuilder sentiment slumped as existing home sales tumbled and single-family home starts/permits plunged), and Philly Fed and LEI tanking… (but apart from all those, everything is awesome and the consumer is strong – oh wait AT&T just warned that Americans can’t even pay their phone bills on time)…

Source: Bloomberg

Which put together sent market expectations for rate-hikes down dramatically on the week…

Source: Bloomberg

And notably after this morning’s ugly PMI (signaling recession), the market priced in a full rate-cut in Q1 2023…

Source: Bloomberg

There is now just a 9% chance of a 100bps hike next week, and a 33% of 75bps in September…

Source: Bloomberg

The terminal rate for Fed Funds tumbled to 3.358% in Dec 2022 then rate-cuts begin…

Source: Bloomberg

Bonds were aggressively bid Thursday and Friday, sending yields from +15bps to -15bps in 2 days…

Source: Bloomberg

30Y Yields tumbled back below 3.00% to their lowest since May…

Source: Bloomberg

Cryptos were also aggressively bid this week with Ethereum the big outperformer (up 25%) and Bitcoin gaining 10%…

Source: Bloomberg

Ethereum rallied back above $1600, its best week since Sept 2021…

Source: Bloomberg

The dollar was weaker on the week, back near 3-week lows…

Source: Bloomberg

An ugly day today in US stocks – thanks to SNAP’s ad-spend signals and ugly PMIs – with the majors losses accelerating after Europe closed…

…wiping some of this week’s lipstick off the bear market pig but the majors all managed to hold on to gains on the week with Small Caps and Big-Tech the best performer (and Dow the weakest). This was NASDAQ’s best week since July 8th…

The line in the sand appeared to be 4000 for the S&P 500

Friday saw a big reversal as the short squeeze from earlier in the week ran out of ammo…

Source: Bloomberg

Utes were the biggest losers on the week (despite plunging rates) and Consumer Discretionary the best performer, closely followed by Tech and Energy stocks (despite today’s weakness)…

Source: Bloomberg

European stocks posted their best weekly gain since late May as investors assessed early earnings results and prepared for the Federal Reserve’s next meeting following the first rate hike from the European Central Bank in 11 years.

Source: Bloomberg

Right as European stocks closed, US equity indices tumbled…

Source: Bloomberg

European sovereign yields were mixed on the week (despite a big tumble today after the ugly Eurozone PMIs) with Italian yields higher on the week while Germany and the rest oif the majors all saw yields drop on the week…

Source: Bloomberg

Gold ended the week lower but the early week weakness prompted a big bounce back above $1700…

Oil prices were marginally lower on the week with WTI unable to hold $100…

And finally, demand destruction and lower oil prices has dragged down pump prices across America…

Source: Bloomberg

But President Biden’s approval rating continues to crash!!