Another mixed bag of data today - something for everyone - ADP showed better job gains than expected (but wage growth soared, re-igniting inflation fears). S&P Global's Services PMI dropped (but prices paid soared) and ISM Services PMI also dropped (notably more than expected) while Manufacturing rose yesterday.
But the market only had eyes for one thing - the plunge in prices paid in ISM Services (which literally diverged from all other recent 'prices paid' surveys and the respondents' comments)...
Source: Bloomberg
For context, that is the biggest two-month plunge in ISM Services Prices Paid since Dec 2008...
Source: Bloomberg
That one datapoint was all the algos needed and stocks rallied, the dollar and bond yields dropped, gold spiked to new highs, bitcoin jumped higher, and even rate-cut hopes rose immediately (but still less than 3 total rate-cuts priced in for 2024)...
Source: Bloomberg
Small Cap stocks loved the 'dovishness' of lower prices paid (and Powell didn't offer much either way) and along with Nasdaq and the S&P ended the day green.
“On inflation, it is too soon to say whether the recent readings represent more than just a bump,” Mr. Powell stated.
“We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent.”
At the same time, he said that cuts to the benchmark federal funds rate are “likely to be appropriate at some point this year” as he does not believe “inflation is reversing higher.”
Then, at 1515ET, a huge sell program suddenly hit stocks out of nowhere...
Source: Bloomberg
We guess the trading bots don't like competition?
And that spoiled the party overall for stonks but they bounced back from that shock. Quite a crazy day - although small moves in the bigger picture. The Dow ended red and is on target for its worst week since October...
Notably, the S&P bounced perfectly at the lows from the 3/20 FOMC meeting spike...
While the broad market was up today, Disney was not - after Iger won in the fight against Trian...
Treasury yields were higher once again overnight but the ISM prices paid data sent them back down to basically end the day unch-ish (2Y -1bp, 30Y +1bp)...
Source: Bloomberg
The yield curve (2s30s) continues to steepen...
Source: Bloomberg
The dollar dived back to one-week lows...
Source: Bloomberg
And that helped send gold to its fifth record closing high in a row, within pennies of $2300 (spot)...
Source: Bloomberg
Crude prices rallied for the fifth day in a row, with WTI topping $86
Source: Bloomberg
Positioning is once again very long in Brent futures...
Source: Bloomberg
Finally, as gold pushes to record-er and record-er highs (in USD terms), Real yields refuse to play along...
Source: Bloomberg
Whatever gold is worrying about... is big.
