Bond Prices Fall as Stock Traders Prepare for Payroll Announcements

Market Fluctuations Amid Geopolitical Focus

The US markets demonstrated some instability today, following a risk-off tape from the previous day. The focus remains on geopolitics, and while stocks in China saw an uptick, Goldman Sachs' trading desk reported a balance in their China flows for the first time in a week. They noted both high-frequency and long-only sell tickets across the complex. Despite this, the upward trajectory did not slow, especially considering that China is currently observing Golden Week.

US Market Performance

On the US side, the markets were relatively calm. Small Caps lagged behind, while Nasdaq led the gains. The major indices traded within a narrow range, which was unexpected given the decrease in gamma. The S&P 500 has returned to the range it was in following the post-Powell spike, and Mag7 stocks have also fallen back into the post-Powell squeeze range.

Volatility Market Prepares for Payroll Announcements

The volatility market is bracing itself for potential chaos on Friday when payroll numbers are released. It's important to remember that volatility markets are about to experience a seasonal shift.

Treasury Yields and Dollar Value

Treasury yields increased across the board today, with the long-end lagging. All yields are higher for the week. The dollar also continued its rebound, returning to its post-Powell spike on FOMC day. This occurred as the Japanese yen weakened, erasing all of its gains from Friday's election panic bid.

Gold and Crypto Performance

Gold ended the day slightly lower, while cryptocurrency took a significant hit. Bitcoin, in particular, dropped back to FOMC-Day levels, around $60,000.

Crude Prices Amid Geopolitical Tensions

Crude prices experienced a pump and dump amid inventory data, escalating tensions in Israel/Lebanon, and OPEC+ headlines.

Financial Services Plumbing

Despite crossing the month/quarter-end rubicon, the plumbing in the financial services sector remains somewhat clogged. The last time this occurred, the repo market experienced a significant disruption.

Bottom Line

This report indicates a complex and fluctuating market environment, influenced by geopolitical events, seasonal shifts, and upcoming payroll announcements. It's a reminder of the intricate interplay between different sectors and the global impact of market movements. What are your thoughts on these market fluctuations? Do you think the volatility market is prepared for the upcoming payroll prints? Share this article with your friends and discuss. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.