Stocks & Gold Gain, Dollar Pain As 'Soft Landing' Narrative Implodes
The US Macro Surprise Index, which measures data surprises against expectations, just suffered its biggest 9-day decline since May 2022. This could be a sign that the economy is slowing down.
Another day and another set of disappointing macro data that slams the narrative about a'soft landing' as
US Macro Surprise Index has just experienced its largest 9-day drop since May 2022
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Source: Bloomberg
The unexpectedly disappointing data on the labor market has sent a message.
rate-change expectations plunging below pre-Powell-Jackson-Hole levels
...
Source: Bloomberg
The market is now
Pricing in 110bps rate cuts in 2024
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Source: Bloomberg
ADP disappointed and GDP did not help. Treasury yields were volatile. The entire curve ended the day virtually unchanged, which was a rare event.
Source: Bloomberg
The yield on 2Y bonds fell intraday, to be basically unchanged for the month. It is now back in the range of early payrolls and CPI movements.
Source: Bloomberg
Stocks of long-duration products rose due to lower STIR yields and a dovish shift. Nasdaq was the leader of the day. Dow lagged behind but still had a positive performance. There was a big oump and dump following the cash opening, but the pain trade has been higher for the moment.
This recent rebound brings the S&P 500 and Nasdaq up to around 2% for the month. Small Caps still have a 5 %... loss.
Source: Bloomberg
The'most shorted' stocks experienced a fourth day in a a row of an initial squeeze, but with little follow-through.
Source: Bloomberg
NVDA extended bounce but was unable breach $500 – its Call Wall – and reversed its direction at this resistance...
The dollar has fallen again to its two-week lows but is still rising nicely
Source: Bloomberg
Bitcoin lost some of its gains from yesterday's SEC GBTC, but found support at $27,000...
Source: Bloomberg
Today, gold is nearing $1950 intraday as it continues to move back towards the same price for the month.
Source: Bloomberg
WTI oil prices reached $82 intraday. A second attempt to slam down the price of oil was made shortly after inventory data revealed that crude stock levels were at their lowest level since December 2022.
As Bloomberg's Simon White points out,
Stocks' rally following bad economic news may be short-lived as there is still plenty of time to react to the escalating recession risks.
Source: Bloomberg
Stocks are at risk due to low volatility, increased instabilities, and pricing which does not anticipate a recession within the next few months.