Bond Market Screams Fed Policy Error, Sparks Huge Value-To-Growth Rotation In Stocks

Bond Market Screams Fed Policy Error, Sparks Huge Value-To-Growth Rotation In Stocks

Stocks were very mixed today with Nasdaq (growth-dominant) soaring as Small Caps (value-dominant) slumped. As the day wore on and various headlines came out of Washington, all somewhat reducing the scale of the fiscal stimulus, stocks all began to fade. The Dow and S&P tumbled into the red and even Nasdaq gave back most of its gains in the last few minutes…

The Russell 2000 / Nasdaq 100 pair is now back at 6 week lows (and critical level over the last 3 months)…

…appears to have found its way back to the old correlation regime with real yields plunging…

Source: Bloomberg

Biggest growth outperformance of value since June today, with Value at its weakest relative to growth in a month…

Source: Bloomberg

Rent The Runway routed…

Twitter twatted…

Trump’s Social Media SPAC surged…

And HOOD was hammered back below its IPO price near record lows…

The bond market was where the big action was today as yields collapsed at the long-end and surge at the short-end (30Y -10bps, 2Y +5bps)….

Source: Bloomberg

Rate-hike expectations are soaring with 1.5 hikes priced in by Sept 2022 and 2.3 hikes priced in by Dec 2022…

Source: Bloomberg

30Y yields were monkeyhammered back below 2.00%…

Source: Bloomberg

This is happening as specs are the most short bonds this year…

Source: Bloomberg

The big bond bear short-squeeze begins…

The yield curve (5s30s) flattened dramatically again today, back below 80bps, screaming that a Fed policy error is on its way…

Source: Bloomberg

And if you thought 2Y TSY yields were blowing out (topping 50bps today), here’s Canada (after they shifted significantly hawkish today)…

Source: Bloomberg

The plunge in real yields also suggests Gold has room to run from here to around $2000…

Source: Bloomberg

The dollar ended unchanged after a choppy session, but remains the recent narrow range…

Source: Bloomberg

Cryptos crashed today with Bitcoin clubbed like a baby seal back below $60,000…

Source: Bloomberg

Ethereum fell back to, and found support at, $4000…

Source: Bloomberg

After the usual puke at 0830ET (London Fix), gold rallied all the way back to $1800…

Oil suffered its biggest drop in over a month on Iran nuke talk headlines and a big crude inventory build…

Finally, as stocks push to ever higher record highs, US economic growth expectations are plunging with The Atlanta Fed’s forecast getting close to contraction…

Source: Bloomberg

Tyler Durden
Wed, 10/27/2021 – 16:00

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