Cryptos Jump, Commodities Dump, & Yield-Curve Slumps In ‘Goldilocks’ Week

Reality set in this week that the ‘goldilocks’ narrative is not compatible with the massive rate-cuts priced-in for next year.

As Goldman warned:

“…it may be hard to justify more than 75bp of cumulative easing without weaker growth. A recession could clearly motivate a much deeper easing cycle, but a high weight on that outcome is not consistent with other asset prices, or with our own central case.

…

For that reason, the market is moving into territory where we think it will become more difficult for US rates to rally unless the growth picture deteriorates more than we, and other markets, expect.”

Stocks mixed-ish, Bonds mixed-ish, Commodities down, Crypto up, & Dollar up as Rate-Cut hopes faded this week (from 140bps in 2024 to 112bps)…

Source: Bloomberg

On the macro side – it was all ‘soft’ with a little firming in ‘hard’ data: Inflation expectations (survey) down along with gasoline, Services (survey) data up, labor market mixed (JOLTS weak but unemployment lower), consumer sentiment (survey) soars, and geopolitical risk mixed (US pressures Israel for ceasefire but military action in Yemen looms).

Source: Bloomberg

Good news, bad news, no news; Didn’t matter as stocks chopped around wildly squeezing and un-squeezing this week. Small Caps and Mega-Cap tech outperformed while The S&P managed to get green for the week but The Dow struggled all week…

Every time The Dow got green on the week, selling pressure hit…

The S&P 500 closed at its highest since March 2022…

…and Nasdaq at its highest close since January 2022…

A chaotic week for ‘most shorted’ stocks, crashing up and down like a whore’s drawers…

Source: Bloomberg

After an ugly open on Monday, Magnificent 7 stocks soared 4.5% off the Monday lows, back up near record highs…

Source: Bloomberg

All of which meant hedge funds got it from both ends unable to escape from Friday’s carnage…

Source: Bloomberg

Energy stocks were the week’s biggest losers while tech and discretionary outperformed…

Source: Bloomberg

We couldn’t help but laugh at the surge in regional bank stocks – now back up near post-SVB highs – while their use of the expensive BTFP bailout facility at The Fed surged to a new record $122BN…

Source: Bloomberg

Treasuries were mixed on the week with the short-end underperforming. Only the long-bond managed to close the week higher in price (lower in yield)…

Source: Bloomberg

Which pushed the yield curve significantly flatter (more inverted). This was the biggest weekly flattening since Nov 2022 to its most inverted since Sept.…

Source: Bloomberg

The dollar surged higher this week (after three straight weeks down) …

Source: Bloomberg

Cryptos were all higher this week with Solana outperforming. BTC and ETH were each up around 13%…

Source: Bloomberg

Bitcoin ripped up to $44,000 (its highest since April 2022)…

Source: Bloomberg

Ethereum neared $2400 (its highest since May 2022)…

Source: Bloomberg

Commodities were all lower with Silver clubbed like a baby seal, NatGas ugly, Oil & gold were sold, and copper was the least ugly horse in the glue factory…

Source: Bloomberg

Spot Gold fell back to $2000 today

Source: Bloomberg

Gold’s outperformance pushed the gold/silver ratio back to the upper end of its range this year (from the lower end)…

Source: Bloomberg

Oil prices rallied today, ending a 6-day losing streak. WTI found support at $70 (5-month lows)…

Source: Bloomberg

Finally, which comes first – the equity market collapse or global central bank balance sheet explosion?

Source: Bloomberg

Our money’s on the former and then the latter and the two meeting in the middle before melting up.