Jump in Crypto and Crude; Bonds and Stocks Take a Hit Amid Various Global Events

Global Events Impact Markets

Despite a relatively calm day in terms of macroeconomic indicators, domestic weather disasters, escalating foreign wars, and turmoil within tech monopolies dominated the scene. The anniversary of the October 7 attacks saw an increase in missile activity in the Middle East, driving crude prices upwards. WTI crude rose above $77 for the first time since mid-August, rebounding from three-year lows. Fears surrounding the impact of the Milton Gulf refinery also contributed to the rise in prices.

The 'Rates-Growth Tango'

On a broader domestic scale, what Goldman's Chris Hussey refers to as the 'rates-growth tango' seems to be back in play. The better-than-expected payroll figures have led to a significant increase in yields, which is negatively impacting stocks. This is due to the reduced likelihood of rate cuts, increased funding costs, and a lower struck Federal Reserve put.

Rate-Cut Expectations Decline

Expectations for rate cuts are falling, with less than two 25 basis point cuts now expected by the end of the year. Additionally, fewer than four additional cuts are predicted for the following year.

Major US Stocks Struggle

All major US stocks had a tough day, with futures dropping at the European open and falling further as the Google judgement was announced. The 'Magnificent Seven' stocks were affected by apprehension ahead of Tesla's Robotaxi day and Google being hit with an injunction related to its app store. This injunction orders the tech giant to open its app store to competition.

'Most Shorted' Stocks Take a Hit

'Most Shorted' stocks suffered significant losses, wiping out all gains made from Friday's squeeze.

Bond Market Continues to Struggle

The bond market's poor performance on Friday continued, with the short-end once again underperforming.

Yield Curve Briefly Inverts Again

The yield curve (2s10s) briefly inverted once again during the morning.

2Y and 10Y Yields Top 4%

Both 2Y and 10Y yields rose above 4% once again.

Stable Dollar and Gold

The dollar remained stable, oscillating within a narrow range after Friday's spike. Gold also traded within a tight range, experiencing a slight fall on the day.

Bitcoin Experiences Two Major Buying Legs

Bitcoin saw two major buying legs during the day's trading, pushing it up to $64,500 before tech was hit by Google headlines, which negatively impacted crypto.

USA Sovereign Risk Continues to Rise

USA sovereign risk continues to rise, despite repeated highlighting of this issue.

Bottom Line

It's clear that a multitude of factors, both domestic and international, are influencing the financial markets. From escalating conflicts in the Middle East to domestic tech monopoly issues, these events are having a significant impact on stocks, bonds, and even cryptocurrencies. It's a complex and interconnected global financial landscape that continues to evolve. What are your thoughts on these developments? Share this article with your friends and let's get the conversation started. Don't forget to sign up for the Daily Briefing, available every day at 6pm.