Stocks Dwindle as Dollar and Yields Surge to 3-Month Highs

Stock Market Experiences Third Consecutive Day of Losses

The stock market experienced a drop for the third consecutive day, marking the longest streak since early September. This is also the worst loss for the S&P in seven weeks. This decline in stocks seems to have been triggered by the recent explosion in rates, as noticed by equity market bulls.

Rise in Treasury Yields

Treasury yields rose across the curve again today, with the long-end outperforming. However, the recent 2-sigma move in rates implies serious drawdowns for stocks. The surge in rates over the last three weeks has had a significant impact on stocks.

Reconsideration of Rate-Cut Expectations

The surge in rates, also known as 'Trumpflation,' has prompted a market-wide reconsideration of rate-cut expectations. This is especially true for expectations for the next year. This reconsideration has had a significant impact on stocks.

Impact on Stocks

The impact of these changes was felt heavily on stocks today. There was a minor comeback after the Beige Book signaled some dovishness, but the Nasdaq was the day's biggest loser, dropping over 2% at one point.

Downfall for Mega-Cap Tech

Mega-cap tech experienced a significant downfall today. All seven of the Mag7 stocks were down today, marking the first time this has happened since September 6th.

Shorted Stocks Take a Hit

'Most Shorted' stocks were hit hard today. Even the so-called 'Trump Trade' experienced selling pressure, although the 'Democratic Victory' basket was hit even harder.

Increased Activity Levels

Goldman's trading desk noted that overall activity levels are up by 5% compared to the trailing two weeks. Market volumes are also up by 5% compared to the 10dma.

Dollar Strengthens

The dollar is showing no signs of stopping, rallying up to its strongest since early July against its fiat peers. Treasury yields are rising as fast as the dollar, also reaching three-month highs.

Impact on Gold and Silver

The strength of the dollar finally impacted gold today, but not before the precious metal hit a new intraday record high. Silver, on the other hand, underperformed gold on the day.

Decline in Crypto

Crypto also took a hit, with Bitcoin dropping back towards $65,000.

Slip in Oil Prices

After two strong days, oil prices slipped lower due to an inventory build, higher crude production, and no extreme headlines out of the MidEast.

Prediction Markets Trending in Trump's Direction

Prediction markets continue to trend in Trump's direction, and even the polls are starting to move in his favor.

Bottom Line

The stock market is experiencing a turbulent time, with stocks dropping for the third consecutive day. The surge in rates and the strengthening dollar are impacting various sectors, from tech stocks to precious metals. As the market continues to react to these changes, it will be interesting to see how this plays out in the long run. What are your thoughts on these market changes? Do you think this trend will continue, or will there be a turnaround? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.