Dollar Dump Sparks Bid For Bonds & Bullion; Pfizer Faux-Pas F**ks Stocks

Disappointing Services ISM data today along with over 20 million Americans still claiming unemployment benefits does not set up well for tomorrow’s payrolls print. Breaking down the economic data recently we see surveys (hope) starting to tumble, the labor market at its weakest since Feb, and Retail at its weakest since June…

Source: Bloomberg

But what really matters for today’s so-called market of stocks is mo’ money and Mitch McConnell comments that stimulus deal is “within reach” sparked a buying panic in small caps (and the rotation out of Nasdaq) but some reality checks on that optimism from Pelosi slowed the algo’s buying roll as the day wore on. In the last 30 minutes, headlines on California’s stay-at-home orders sparked selling which then accelerated on headlines that Pfizer’s vaccine rollout would be delayed

Pfizer Inc. expects to ship half of the Covid-19 vaccines it originally planned for this year because of supply-chain problems,

That’s what happens when the market is priced for perfection-plus…

All sparking the biggest short-squeeze since September (“most shorted” stocks are up 17 of the last 22 days, up a stunning 35% since the start of November)…

Source: Bloomberg

Stimulus chatter today sparked a surge in Small Caps relative to mega-tech stocks – unwinding all of the rotation from Tuesday before stalling intraday…

 

The Dow managed to scramble back above 30k to a new record high, before the Pfizer vaccine delay headlines hit late on sending it tumbling…

 

Bonds were also bid today, with the long-end down 2-3bps, accelerating lower into the close after the Pfizer headlines…

It appears once again that the much-touted bond “rout” has stalled out…

Source: Bloomberg

And for the first time ever, IG bond yields fell below 10Y Breakevens…

Source: Bloomberg

Today’s big mover was the dollar – which plunged…

Source: Bloomberg

To critical support around April 2018 lows…

Source: Bloomberg

Be careful what you wish for in the “dollar down, stocks up” trade… it’s not linear, at some point faith is lost…

Thanks in large part to EUR gains as chatter of ECB being out of ammo sent the currency higher…

Source: Bloomberg

Cable was higher on the day but gave some back as hopes of a Brexit deal faded late on…

Source: Bloomberg

Bitcoin continued to recover from Tuesday’s pummeling, back above $19500 today…

Source: Bloomberg

Gold was higher again today, extending its rebound off the 200DMA…

WTI managed modest gains despite OPEC+ agreed a small production increase in Jan, managing to scramble back above $45…

 

Finally, since the start of May, S&P has gained a stunning 695 points during the overnight session +695pts (and just 60 points during the day session, between the cash open and close)…

Trade Accordingly!

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