Stocks, Bonds, Crypto, & Commodities Soar As ‘Dovish’ Powell Trumps ‘Hawkish’ Payrolls

A chaotic week of China COVID headlines mixed with OPEC production cut rumors, sprinkled in with ugly economic data (ISM/PMI/Housing) and “great” economic data (payrolls and wage growth) was all trumped by the market’s belief that Fed Chair Powell spoke ‘dovishly’.

On the week, Fed rate trajectory adjusted lower (dovishly) with terminal Fed rate expectations dropping and rate-cut expectations increased…

Source: Bloomberg

Which pushed stocks higher on the week (notably the equity dump from the ‘hawkish’ jobs data this morning was quickly rebuked as the reality under the headlines showed things are nothing like a bright. The Nasdaq was the week’s best performer, Dow managed to close green on the week thanks to a late-day meltup…

NOTE – stocks had traded rather hawkishly into the Powell speech.

VIX tumbled back below the key 20 level to its lowest since April…

Source: Bloomberg

Bonds were also bid on the week, with the entire curve basically down around 17-18bps on the week…

Source: Bloomberg

The yield curve ended unchanged on the week after steepening ahead of today’s payrolls print and then flattening hugely today…

Source: Bloomberg

The dollar fell for the 6th week of the last 7, breaking below its 200DMA… This is the lowest close for the Bloomberg Dollar Index since June…

Source: Bloomberg

Cryptos managed gains on the week with Ethereum up 7.5% and Bitcoin up around 3%…

Source: Bloomberg

Commodities all benefited from a weaker dollar and dovish talk with silver outperforming…

Source: Bloomberg

A noisy week for crude but WTI ended the week up at $80…

Gold surged back above $1800 this week – its highest since August…

Finally, we wonder just how Jay Powell feels about the fact that financial conditions have eased dramatically in the last few weeks…

Source: Bloomberg

In fact, all of the tightening since the September FOMC meeting has now been erased… that doesn’t seem like the kind of ‘longer and more restrictive’ path that Fed speakers have been jawboning all week?!