Bonds, Stocks, & Bullion Bounce As Market Calls Powell’s ‘Hawkish’ Bluff

Overnight ugliness in China data spurred yuan weakness (pushing CNH to its weakest vs the dollar since Nov ’22), but the dollar’s weakness today (post-ECB) smashed yuan higher (its biggest jump since March) despite all those hopes of stimmies…

Source: Bloomberg

The ECB’s Christine Lagarde was not f**king around with nuance this morning as she hiked rates (as expected) and made it clear they will hike more – traders did not doubt her and the euro soared relative to the dollar (biggest EUR rally since early Feb)…

Source: Bloomberg

However, in US markets, traders pushed back against Powell’s apparently hawkish bluster, sending rate-change expectations dovishly lower (though still above pre-FOMC levels)…

Source: Bloomberg

‘Hot‘ retail sales numbers diverged from ‘Cold‘ jobless claims data and ugly industrial production opposed a beautiful resurgence in Empire Fed’s Manufacturing survey – so take your pick of what narrative (soft, no, hard landing).

As far as stocks are concerned – it’s the ‘never landing ever’ route as everything roared higher with Nasdaq leading the way. Nasdaq was up 2% from pre-FOMC at its highs today and Small Caps ramped back into the green since FOMC…

Nasdaq has now reversed almost all of its underperformance relative to Small Caps from last week…

Another day, another short-squeeze…

Source: Bloomberg

Ahead of tomorrow’s quad-witch, options-land was chaotic with 0-DTE traders pushing back hard against the opening ramp in stocks only to reverse it all, gamma-squeezing stocks to the day’s highs…

Source: SpotGamma

Here’s today’s winning lottery ticket (with over 350,000 contracts traded)…

Source: Bloomberg

Do Not Panic!! NVDA closed red!

Treasuries were aggressively bid today with the belly outperforming, erasing all the post-FOMC move with the short-end underperforming overall for the last two days (though all yields are lower from Tuesday’s close)…

Source: Bloomberg

The dollar – mirroring the surge in the euro – plunged by the most since early Feb today, back to 6-week lows…

Source: Bloomberg

Bitcoin bounced back modestly from last night’s bloodbath (that dump occurred right around the cash equity close, not at the FOMC)…

Source: Bloomberg

Gold rallied (helped by the weak dollar), erasing yesterday’s post-FOMC plunge…

Oil prices rallied today, reversing yesterday’s losses with WTI back above $71…

Finally, was today’s pump and dump in NVDA the top?

Source: Bloomberg

And, with quad-witching tomorrow, we thought this little chart from Nomura’s Charlie McElligott was worth noting…

Point-being, McElligott explains, despite a local Vol suppressing outcome from the Fed yesterday, a “higher for longer” message only increases the attractiveness of “left tail” hard-landing trades in both -SOFR and -VIX Call Spreads in coming months.

Translation: this is as good as it gets – brace!