US Stocks Erase All 2022 Gains As Fed Rate-Hike Expectations Soar

Short-Term Interest-Rates (STIRs) continued their hawkish push higher today after The Fed’s Jim Bullard noted that FOMC could start raising policy rates as soon as March and shrinking the balance sheet will be the next policy step…

The market is now pricing in an 86% chance of a March rate-hike and fully pricing in 3.5 rate-hikes by the end of 2022…

Source: Bloomberg

And as STIRs have ripped, so US Mortgage rates surged to their highest since May 2020…

Source: Bloomberg

Small Caps outperformed on the day as The Dow lagged with Nasdaq and S&P failed to hold unch…

And today’s Dow weakness pushed it top join the rest of the US majors in the red for 2022…

The S&P bounced perfectly at its 50DMA today…

“Most Shorted” Stocks continue to slide, now back at one-year lows…

Source: Bloomberg

Hedge Fund VIP stocks bounced hard after 2 really ugly days…

Source: Bloomberg

The combined market cap of the GAMMA stocks (Google, Amazon, Meta, Microsoft, & Apple) dropped to one-month lows today (down around $700 billion from their peak)…

Source: Bloomberg

Another mixed (but violent) day in bond-land today with the short-end getting monkey-hammered this time and the long-end flat (30Y -1.5bps, 2Y +6bps)…

Source: Bloomberg

This flattened the yield curve dramatically as fears rebuild of a big Fed policy error…

Source: Bloomberg

The dollar chopped around again but ended unch after tagging Tuesday’s highs…

Source: Bloomberg

Cryptos extended yesterday’s big losses but bounced back during the day session…

Source: Bloomberg

WTI Crude topped $80 briefly today – erasing all Omicron and Biden SPR Release losses – before fading back a little…

Gold was clubbed like a baby seal today, back below the $1800 Maginot Line…

Lumber prices are soaring to start the year (highest since June of last year)…

Source: Bloomberg

It has never been this high at this time of year.

Finally, on a random side note, while yesterday was a shock to many, it was a mere fleshwound of a reaction to Fed Minutes when compared to the carnage in Oct/Nov 2008…

And still there are talking-heads today claiming that this 2% drop from All-Time-Highs is enough to prompt Powell to panic and flip-flop already. Simply put, if he did, it would be far worse an outcome in the long-run than if he actually shows the market he has a pair…

And TINA just got punched in the face.

Source: Bloomberg

Treasuries are the ‘cheapest’ to stocks since May 2019.