Nasadq Soars Into Bull Market As Rate-Hike Odds Plunge On CPI Slowdown

The cooler than expected CPI prompted panic ‘ding dong the inflation witch is dead’ buying in stocks and bonds and dumping of hawkish-tilted dollars. Many strategist pointed out this is just one print and inflation remains extremely high but no one in stock-land cared.

Fed’s Evans was rolled out to remind everyone how hawkish The Fed is…

“I expect that we will be increasing rates the rest of this year and into next year to make sure inflation gets back to our 2% objective”, Chicago Fed President Charles Evans says.

While the inflation report for July showed improvement relative to the prior two months, inflation remains “unacceptably high,” Evans says in discussion hosted by Drake University in Des Moines, Iowa

…but that did nothing either…

Stocks soared… Small Caps outperformed (+3%) followed closely by Nasdaq, the S&P, and then The Dow (which still managed a 1.5% gain on the day)…

With Nasdaq now up 20% from its June lows – re-entering a bull market…

…as Rate-hike expectations tumbled…

Source: Bloomberg

And September 75bs rate-hike odds tumbled from 80% to 30-40%…

Source: Bloomberg

VIX dropped below 20 for the first time since April but we did note something unusual in that VVIX moved higher as VIX tumbled…

Source: Bloomberg

Treasuries were mixed on the day with all yields puking lower on the CPI print but the long-end yield surged back higher on the day…

Source: Bloomberg

The yield curve steepened dramatically after CPI, tagged the pre-payrolls levels then reversed flatter…

Source: Bloomberg

The dollar index tumbled on the CPI print…

Source: Bloomberg

Crypto spiked on the CPI print with bitcoin rallying back above $24,000 before sliding back in the afternoon…

Source: Bloomberg

Gold futures spiked on the colder than expected CPI print the gave it all back quickly and then some to end lower on the day…

Oil dropped on the CPI print then ripped back higher after the inventories data…

Finally, ‘meme stocks’ continue to surge, back at almost 4 month highs…

Source: Bloomberg

This won’t end well…