Bonds, Stocks, Bitcoin, & Bullion Soar After Brits ‘Save The World’

First one to ‘pivot’ wins?

The Bank of England’s desperate bailout of its pension funds – by pivoting back to QE (only temporarily of course) – sparked chaotic buying across global markets. Bonds were the most dramatic movers, but FX swings were sizable, and stocks, gold, crypto, and oil all ripped on the renewed easing efforts.

First the scene of the crime… UK 30Y Gilt yields collapsed (-106bps) after BoE intervention…

Source: Bloomberg

US Treasury yields followed suit with the belly of the curve plunging over 25bps, erasing all the week’s yield increase…

Source: Bloomberg

10Y yields reversed perfectly at 4.00% coincidentally, puking over 32bps from high to low intraday – this was the biggest daily drop in 10Y yields since 2009…

Source: Bloomberg

Expectations for rate-hikes are dropping (Terminal rate now down 40bps from its peak), but today saw subsequent rate-cuts on the rise once again…

Source: Bloomberg

…with EDZ2-H3 negative again (implying a rate cut in Q1 of next year)…

Source: Bloomberg

Additionally, as rate-cut expectations begin to rise again, we saw another large options trade betting on a huge rate-cut in Q1 (around 100bps).

As rate trajectory expectations shifted dovishly so the Dollar Index tumbled…

Source: Bloomberg

But cable rallied, despite BoE’s actions…

Source: Bloomberg

Crypto rallied on the day – after yesterday’s massive roller coaster – with bitcoin back above $19,000…

Source: Bloomberg

European stocks spiked on the news, then faded, then rallied into their cash close to end slightly green (FTSE-250 was unchanged after being down 3% early in the session)…

Source: Bloomberg

US futures were notably lower overnight before the Brits ‘saved the world’, then spiked green, trod water, then soared after the cash open. Small Cap rose over 3.5% on the day and were up over 5% from overnight lows. The rest of the majors rallied 3.5-4% off overnight lows. Some profit-taking at the close wiped a little lipstick off…

On the heels of a massive short squeeze today…

Source: Bloomberg

VIX crashed back from almost 35 to almost 30.00…

Spot Gold spiked back above $1660…

Source: Bloomberg

WTI surged back above $81…

Notably, US retail gas prices at the pump are up 8 straight days…

Source: Bloomberg

Finally, we note one of the market’s most important ‘stress’ indicators is flashing red…

Source: Bloomberg

This is happening as a record $2.37 trillion was lodged with The Fed for o/n repo.