{"id":1451024,"date":"2024-01-16T21:00:00","date_gmt":"2024-01-17T02:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1451024"},"modified":"2024-01-16T21:00:00","modified_gmt":"2024-01-17T02:00:00","slug":"stocks-bonds-oil-gold-all-down-as-waller-wrecks-rate-cut-party","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/stocks-bonds-oil-gold-all-down-as-waller-wrecks-rate-cut-party\/1451024\/","title":{"rendered":"Stocks, Bonds, Oil, & Gold All Down As Waller Wrecks Rate-Cut Party"},"content":{"rendered":"

Stocks, Bonds, Oil, & Gold All Down As Waller Wrecks Rate-Cut Party<\/span><\/p>\n

\n

Comments by Governor Waller in a speech and discussion today raised the risk that the first cut could come slightly later than the market’s expectation of March and that the pace of cuts could be quarterly from the outset, rather than the market’s more aggressive forecast <\/strong>of three initial consecutive cuts followed by a switch to a quarterly pace.<\/p>\n

On the timing of the first cut<\/strong>, Waller said he believes that the FOMC will be able to lower the funds rate \u201cthis year.\u201d<\/em><\/p>\n

On the speed of cuts,<\/strong> Waller said the funds rate \u201ccan and should be lowered methodically and carefully\u201d and that he sees \u201cno reason to move as quickly or cut as rapidly as in the past,\u201d when the FOMC was combating recessions.<\/em><\/p>\n

Waller also noted that next month’s scheduled revisions to CPI inflation<\/strong> (the seasonal factors will be revised on February 9) could influence his thinking on rates cuts,<\/strong> especially if the revised data show a less clear deceleration recently.<\/p>\n

The result was most evident in the drop in the market’s expectations for a rate-cut in March…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

…and expectations for 2024 rate-cuts declined also…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Treasury yields were higher across the curve with the long-end underperforming (from Friday’s close)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

This was the 10Y yield’s highest close since the Dec FOMC meeting (back above 4.00%)…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Financial conditions have eased back again from their tightening bias to start the year and remain near their loosest since August 2022…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Stocks did not like Waller’s comments<\/strong> at all but while yields were higher, the growthy\/long-duration tech stocks actually outperformed (ending red despite a late-day panic-bid algo ramp<\/strong> try to get green) while Small Caps were the most punished…<\/p>\n

<\/a><\/p>\n

With bank earnings now mostly, all the majors are in the red since last Thursday’s close with MS pummeled today…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

MAG7 stocks drifted modestly lower on the day…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

‘Most Shorted’ stocks continued the trend lower in 2024…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Bitcoin rallied back above $43,000 today, but well off the pre-ETF highs…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

With ETF aggregate volumes still concentrated in IBIT and FBTC…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

The dollar ripped higher today, almost entirely erasing the post-FOMC drop……<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

And as the dollar rallied, gold tumbled…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

Oil edged lower on a choppy day – despite the shitshow in the Red Sea getting considerably worse…<\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

And finally, EMFX was pummeled, with MXN puking over 2% (after Trump’s big win last night?)…<\/strong><\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

…and given that move, it is worth considering how the election could impact markets.<\/p>\n

Trump’s odds of winning the election are now at the highest, and 3 ppts above Biden…<\/strong><\/p>\n

<\/a><\/p>\n

Source: Bloomberg<\/em><\/p>\n

As Goldman notes, on balance, a Republican ‘sweep’ looks likely to increase the chances of a stronger USD, higher breakeven inflation rates, higher yields, and a steeper yield curve.<\/strong> It may also increase the tails in both directions for energy prices.<\/p>\n

<\/a><\/p>\n

But, as the charts above show, there was little direct impact on macro markets until the Fall. <\/strong><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nTue, 01\/16\/2024 – 16:00<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Stocks, Bonds, Oil, & Gold All Down As Waller Wrecks Rate-Cut Party Comments by Governor Waller in a speech and discussion today raised the risk…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1451024","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1451024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1451024"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1451024\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1451024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1451024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1451024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}