Stocks Soar After Dismal Macro Data, Hawkish Fed Minutes

Stocks Soar After Dismal Macro Data, Hawkish Fed Minutes

Another day, another disappointing US macro data point (durable goods orders printed less than expectations)…

Source: Bloomberg

Other than April 2020 – when the entire economy was closed – May’s serial disappointment in US Macro data is the worst since Lehman

No new news is good news for stocks as The Fed Minutes – which are as hawkish as they have been at any time in the last 30 years

Source: Bloomberg

…provided no ‘death blow’ for markets and prompted an immediate rip higher in stocks. Some late-day weakness/profit-taking hit the market, but all the majors ended green with Small Caps led the day along with Nasdaq…

NOTE: as we detailed here, The Fed let slip some signals of when it might halt hiking and we suspect this meltup was supported by that also.

…and correspondingly short-end yields dropped along with higher stocks…

Source: Bloomberg

“Most Shorted” stocks were squeezed perfectly up to unchanged for the week, and from yesterday’s opening puke…

Source: Bloomberg

Treasuries were lower in yield across the curve today but only very modestly, led by the belly (5Y -2.5bps) which again supports the early Fed fold thesis…

Source: Bloomberg

A 50bps hike is a done deal for June, but odds are fading modestly for July and tumbling for September…

Is this why?

*BOSTIC: MAY MAKE SENSE TO PAUSE IN SEPT., DEPENDING ON ECONOMY

And there it is: the first “pause” hint
Expect many more, and then a hard stop

— zerohedge (@zerohedge) May 23, 2022

The dollar managed gains today after 3 straight down. After the Minutes, the dollar started to pare gains…

Source: Bloomberg

Bitcoin managed modest gains on the day (though was unable to hold $30k) shrugging off Guggenheim’s Scott Minerd’s flip-flop from a target price of $400,000 to $8,000 (not a typo)

Source: Bloomberg

Gold was spanked back to Monday’s lows early  as the dollar rallied but bounced back after the Fed Minutes

Oil managed modest gains today, reversing a drop after DOE data showed a modest drop in gasoline demand and a distillate stock build…

US NatGas roundtripped on the day top end marginally higher after soaring above $9 for the first time since 2008…

Notably, US NatGas (front month futs) has converged in price (on an oil barrel equivalent basis) with EU NatGas (day-ahead)…

That’s the price Americans pay for ‘democracy’ in a country 5700 miles away.

Finally, it appears the market continues to lose faith in The Fed’s inflation-fighting bona fides and has pulled the terminal-rate lower and sooner in recent days…

Source: Bloomberg

Let’s hope the market is not disappointed when Powell and his pals jawbone that sentiment away… or, as we noted earlier, did The Fed just signal when rates will peak?three more 50bps hike and then the Fed pauses… indefinitely, its next move a cut as the economic recession emerges from hiding.

Tyler Durden
Wed, 05/25/2022 – 16:00

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