Powell Pummels Bonds & Bullion, Saves Stocks With “Grain Of Salt”

Powell Pummels Bonds & Bullion, Saves Stocks With “Grain Of Salt”

Stocks (and everything else) puked on The Fed statement and dotplots (amid hawkish signals for Fed Funds and PCE)… but then Powell saw what happened and stepped in to save the day with some epic cognitive dissonance. This seemed an appropriate analogy…

Fed Chair Powell trying not to talk about taper today $USD pic.twitter.com/zyAbB4766x

— Viraj Patel (@VPatelFX) June 16, 2021

The message from Powell today was simple – Don’t believe your lying eyes about inflation; The Dot Plot is useless, ignore that too; and ignore that fact in the past, tapering was bearish – this time, Taper is bullish!

Plunge Protectors stepped in fast and ignited enough momentum to get Nasdaq and Small Caps into the green (but just could not hold it and everything ended red – though well “off the lows”)…

Can you spot the moment that Jay Powell said “take the dot-plot with grain of salt“…

Spot the odd one out… only stocks retraced the FOMC reaction function on the “grain of salt” (bonds, the dollar, and gold did not)…

Source: Bloomberg

Meme stocks were hit today but “Most Shorted” stocks were ripped back into the green on the grain of salt bullshit…

Source: Bloomberg

VIX was a handful… especially with Friday’s quad witch malarkey, spiking above 19 on The Fed statement before crashing back below 16.6…

Treasury yields spiked dramatically on The Fed statement (and didn’t come back during the presser). Notably the belly of the curve was the most dramatically affected with 5Y-10Y up around 10bps and the wings (2Y and 30Y up around 2-3bps)…

Source: Bloomberg

Notice that 10Y yields seemed to find support and resistance around the May payrolls print plunge…

Source: Bloomberg

2Y Yields spiked to their highest since June 2020…

Source: Bloomberg

The yield curve (5s30s) crashed to its lowest level of the year…

Source: Bloomberg

The market’s forecast of Fed rates also did not reverse course… now pricing in almost completely one hike by the end of 2022…

Source: Bloomberg

Additionally, the dollar did not reverse course like stocks…

Source: Bloomberg

Cryptos were lower on the day with some noise around the Fed statement…

Source: Bloomberg

And gold also did not reverse course…

Copper crumbled…

And oil ended lower (but was barely affected by The fed) driven more by inventories data and stop-runs…

Lumber tumbled again today, and is now underperforming bitcoin on the year (and are down 42% from the highs)…

Source: Bloomberg

Finally, in case you are confused “you are here”…

Tyler Durden
Wed, 06/16/2021 – 16:01

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