Banks Bid, Bonds & Bitcoin Battered As Stagflation Scare Soars

The day began with a disaster for the macro-perspective, as the EU PMIs were a complete disaster (growth plummeting, but inflation sticking). Next, the Chicago Fed’s National Activity Index was significantly worse than expected. (54 of 85 indicators were in decline).

US PMIs are a further blow to the wound. The service sector has finally taken a hit, but prices have been more volatile than expected. This is in line with the European picture. It also spells out the big s for central bankers: STAGFLATION.

Growth expectations slipping...

Prices are not falling...

The US macro surprise index has dropped the most in three days since May 2022.

Source: Bloomberg

The markets have become more hawkish, with the expectation that the 25bps rate hike this week will not be cut until at least January '24.

Source: Bloomberg

The day's stock trading was relatively tight with Nasdaq lagging and The Dow rising (up for 11th consecutive day )...

The Nasdaq Rebalance has now taken place. We saw a slight reversion of the up-weighted vs. down-weighted name - however, the former outperformed both by more than 400bps.

Source: Bloomberg

The recent performance of banks has continued to outperform that of big-tech...

Source: Bloomberg

Treasuries are being sold in all denominations, with the short end underperforming. As soon as the US session opened, bonds were sold.

Source: Bloomberg

This flattened yield curves (2s30s) towards post-SVB levels.

Source: Bloomberg

Today, the dollar was quiet (even though Euro moved around in PMIs )...

Source: Bloomberg

Bitcoin has fallen below $30k today.

Source: Bloomberg

The flow of WorldCoin appears to mirror the flow that Sam Altman experienced when it was first released.

Source: Bloomberg

Today, gold extended its recent trend downward with two selling legs.

WTI oil prices soared to $79, their highest level since April.

It is very rare to sell stocks that have exceeded earnings.