FedSpeak Saves Stocks Ahead Of CPI Scare, Bond Yields Tumble

A FedSpeak-Fest today offered just enough hope that a ‘pivot’ is possible as Williams said “50bps-hikes are base-case, not sure if need to raise rates above neutral,” Barkin optimistically echoed that “it will take time to get inflation down, need not create deep recession,” Bostic reaffirmed “strong and steady” hiking at 50bps per meeting, and Waller proclaimed that “this was not a shock-and-awe Volcker moment.”

All of which seemed far-removed from the “we’ll hike rates to eternity and beyond to crush inflation” mantra that had been top of mind into last week’s FOMC meeting.

The fact is that STIRs are starting to unwind some of its extreme hawkish expectations…

Source: Bloomberg

And at the same time, history rhymes as financial conditions have tightened significantly – now at the same level where Powell flip-flopped back to dovish in 2018…

Source: Bloomberg

Of course, tomorrow’s CPI print will – one way or the other – change all of this.

It was a chaotic day in US stocks for sure with an overnight relief rally after yesterday’s pain quickly giving way after the US cash markets opened. Then the bounce back on Waller’s comments, and then the now ubiquitous fade into the close…

S&P’s 4,000 level was in play all day…

VIX tested up to yesterday’s close into the European close and then was dumped as it feels like some hedges were unwound into the Waller pump…

Treasuries were mixed with the long-end bid while the short-end saw yields rise very modestly (20Y -6bps, 2Y +2bps). 2s and 30s are now both down 12bps on the week with the belly outperforming…

Source: Bloomberg

10Y yields closed back below 3.00%…

Source: Bloomberg

The Dollar Index trod water for the second day, managing very small gains after last week’s roller coaster…

Source: Bloomberg

Bitcoin found support at $30,000 last night and closed back above $31,000 today (after trading above $32k intraday)…

Source: Bloomberg

As TerraUSD recovered most of its dollar peg…

Gold was dumped again, back below $1850…

Copper’s relative underperformance of gold suggests perhaps we have seen the cycle peak in 10Y Yields…

Source: Bloomberg

US NatGas prices spiked after reports that Ukraine was shutting off one of the pipelines for Russian gas into Europe…

Oil prices slipped lower (ahead of tonight’s API inventory data) with WTI back below $100 as growth fears dominated…

Finally, US Retail gasoline prices surged to a new record high today – well above Biden’s cunning SPR unleash plan levels – but apparently it’s still Putin’s fault?

Source: Bloomberg

But don’t worry America, White House spokesperson Jen Psaki explained that “gasoline prices should come down as oil prices fall,” and added that they are “closely monitoring the situation.” Phew!