The morning started with two ugly data points as jobless claims jumped dramatically (this is the biggest rise in initial claims year-to-date – ex-COVID – since 2009…
Source: Bloomberg
…and Wholesale Sales totals tumbling into the red YoY (a strong recession signal)…
Source: Bloomberg
…pulling Treasury yields and the dollar lower and sending gold higher as the market’s expectations for The Fed dropped dovishly lower…
Source: Bloomberg
And bear in mind that, as Deutsche Bank strategist Steven Zeng said in a recent research note, net bill issuance of $400 billion is expected in June, followed by $500 billion between July and September. In total, Zeng estimated $1.3 trillion in net bill issuance by the end of the year… all of which could well drain significantly liquidity from the system.
But hey, keep selling vol (down 9 of the last 11 days) – VIX hit a 13 handle today, the lowest since Jan 2020…
Source: Bloomberg
Today saw a reversal of yesterday’s chaos in equity land with Nasdaq surging at the cash open while Russell 2000 was dumped (but the latter made a strong comeback after Europe closed). S&P and Dow rallied around 0.5%…
Nasdaq was supported by the 0-DTE traders all day today who bought calls with both hands and feet…
Interestingly, the ‘soft landing’ reversal stalled today as Nasdaq outperformed Small Caps (but only modestly and even that reversed back lower in the afternoon…
Source: Bloomberg
TSLA rallied for the 10th consecutive day (it has only rallied for a longer period once before, in Jan 2021)…
Oh, and then there’s CVNA…!
Treasuries were bid across the curve with the belly outperforming (5Y -9bps, 2Y -3bps, 30Y -6bps). The 30Y yield is back to unchanged on the week…
Source: Bloomberg
The dollar tumbled again today (its biggest daily drop since March) – the second big drop in a week – to 3-week lows…
Source: Bloomberg
Bitcoin went nowhere today…
Source: Bloomberg
Oil prices plunged today with WTI back below $70 and well below pre-Saudi-cut levels after headlines about possible Iran nuke deal talks… which was denied about an hour later…
Gold surged today, erasing yesterday’s plunge as markets are all acting like penny stocks…
Finally, the “trilemma” continues to confuse…
The dollar, tech stocks and real rates are not supposed to act like this into a recession.
The dollar rallies (fact) on higher real rates (check) OR rising risk aversion (not present), tech rallies (fact) on lower real rates (not present) OR higher risk appetite due to US exceptionalism (check).
Goldman believes that the dollar is right and equities aren’t.
Tyler Durden
Thu, 06/08/2023 – 16:00
