A quiet macro day (though we did see NYFRB inflation expectations plunge!), but some ‘good’ news from Washington reduced the risk of govt shutdown in 11 days modestly.However, there was plenty of new narrative creation from FedSpeak. Logan and Bostic double-whammy’d with ‘not as dovish as the market thinks’ comments on rates BUT ‘more dovish than the market thinks’ on Fed balance sheet runoff…

This prompted March rate-cut odds to decline a little more…Source: BloombergBut sent Swap-spreads significantly higher, a warning sign from the market on potential liquidity issues ahead…Source: BloombergTreasury yields were lower across the curve with the belly outperforming. The bulk of the buying took place in the European session…Source: BloombergThe 10Y yield broke back below 4.00% intraday (though held above Friday’s lows), but ended above 4.00%…Source: BloombergNegative gamma (meaning moves are exaggerated one way or the other) combined with lower yields and dovish Fed comments sent stocks soaring, led by mega-cap tech (laggards to leaders) and small caps (short-squeeze-fest). The Dow lagged thanks to Boeing’s bloodbathery…0-DTE traders bought calls with both hands and feet with massive positive delta flow all day and a late-day spike at the close…Source: SpotGammaTech (and Discretionary) sectors outperformed today while the only red sector was Energy which was hammered as crude crumbled…Source: Bloomberg‘Magnificent 7’ stocks soared higher today, erasing 75% of the losses for the year…Source: Bloomberg‘Most Shorted’ stocks squeezed hard today, erasing around half of the YTD losses to Friday’s close…Source: BloombergRetail favorite (meme stocks) rallied hard today…Source: BloombergThe dollar limped lower on the day but held above Friday’s whiplash lows…Source: BloombergBitcoin exploded higher today amid growing anticipation of the SEC’s imminent approval of a spot ETF…Source: BloombergThat sent the largest cryptocurrency to its highest since March 2022 – before all the existential crisis (TerraUSD, FTX, 3AC etc) struck…Source: BloombergAnd Ethereum underperformed, now at its weakest since April 2021…Source: BloombergDespite the dollar weakness – and Fed dovishness – spot gold prices declined, but found support at $2020, near the top of the FOMC-day spike…Source: BloombergBut the big news was in black gold as WTI crashed to a $70 handle…Finally, the ‘good’ news for Biden is that the lower oil prices have pulled the price of Regular Gasoline at the pump to its lowest since May 2021…Source: Bloomberg…but that’s still 37% higher than when Biden came into office. More By This Author:Inflation Expectations Tumble To Lowest Since Jan 2021Boeing & Spirit AeroSystems Shares Plunge After Max 737-9 Max Door Blowout IncidentFor Third Straight Year, Texas Is Top Destination For U-Haul Renters