First things first, the market is starting to aggressively price in a Republican/Trump victory in November after Thursday night’s farce.Goldman’s ‘Republican / Democrat’ stock baskets massively outperformed today…Source: BloombergOverall activity levels today were “explosive” according to Goldman’s trading desk with volumes +32% vs. the trailing 2 weeks with market volumes up just +1% vs. the 10dma (mkt wide activity obv backloaded today)Goldman said its floor is -3% better for sale, with both HFs and LOs tilted that way

Treasury yields exploded higher intraday Friday with some suggesting this is also pricing in a Trump victory (and other pointing out that hedgies are record short the ultras). Of course, it’s just as likely some qtr-/mth-end rebalance flows…Source: BloombergWhich is more likely TBH since we saw some late shenanigans in stocks too (and the annual Russell Rebalance sparked its normal frenzy)… Source: BloombergBut away from politics (and today), US Macro data serially disappointed in the first half of the year, crashing to its ugliest since 2016. This was the worst start to a year for macro surprises since 2018 (and second worst since 2012)…Source: BloombergBut, despite all this ‘bad news’, rate-cut expectations have plunged YTD, with 2024 starting the year with 160bps priced in and ending H1 with just 45bps priced in. 2025 expectations did pick up modestly, from around 70bps to 87bps…Source: BloombergThe result of all that: stocks, gold, and crude (and crypto) all notably higher, bonds dumped and the dollar stronger in H1Source: BloombergYear-to-date, it has been all mega-cap tech all the time, dragging the S&P and Nasdaq up dramatically (decoupling from The Dow and Small Caps with Trannies in the red in H1)… Source: BloombergThe S&P’s 15% gain is the best H1 in an election year since 1976, and was set against a very low volatility means Sharpes are through the roof.June was extremely quiet with long gamma squelching all directional moves…Source: BloombergWith realized vol for the month plunging to just 6.3…Source: BloombergBreadth remains dreadful – going nowhere at all as stocks melted up in June (thanks to Mag7)…Source: BloombergTech stocks soared in H1 with financials and energy just behind. Real Estate was clubbed like a baby seal (which is no surprise given that home sales are plunging back to or near record lows)…Source: BloombergH1 and Q2 and June were all about AI stocks, which have massively outperformed…Source: BloombergThe other massive winner was GLP-1 stocks…Source: BloombergYields were up notably in H1 2024 (10Y +47bps), following a very similar path to 2018 and 2021, with only 2022 worse since 2009. What is also notable is just how uniform the rise in yields has been – the entire curve up around 46-50bps – as Q2 saw bonds bid as macro data disappointed…Source: BloombergThe dollar surged to its second strongest H1 since 2013, with a big surge in June as yen collapsed…Source: BloombergBitcoin had its 5th best start to a year on record (2016, 2017, 2019, 2022, 2023 were better) ending H1 up 40%. Solana and Ethereum also had a great start to the year…Source: BloombergGold surged in H1, up over 13%, its second best year since 2016 (only 2020 was better). But the last six weeks have seen the precious metal coiling…Source: BloombergOil also had a strong H1 thanks to a rebound in geopolitical risk premium in June…Source: BloombergFinally, after such a strong H1, several bulge bracket bank traders are starting to sound a little nervous. Who can blame them?Source: BloombergWhich happens first, 10Y yield hits 3.5% or S&P 500 hits 5,000?…or 3,500?Source: BloombergHow far would stocks have to fall before the liquidity machines ramp back up?More By This Author:Ahead Of Stress-Tests, Banks Saw Big (Adjusted) Deposit Inflows, But…
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