Market Recap: Stocks, Gold, Oil, and Crypto Prices Rise

Market Rebound Following Rate Cut

Following yesterday's pump-and-dumps across most major asset classes, markets in Asia, Europe, and the US saw a rise in stocks, gold, oil, and crypto prices, along with bond yields. This is the first time that yields have risen after a 50bps cut since October 2008. The 50bps cut and the start of the easing cycle led to a 'Risk On' situation in equity-land, with Tech leading the rally. More than 375 names in the S&P saw an uptick on the day.

Stocks Surge, Goldman's Trading Desk Observations

Nasdaq and Small Caps led the surge in stocks. The Dow, however, lagged behind, with an increase of only 1%. Goldman's trading desk noted that volumes were up by 20% compared to the 20dma, with ETFs capturing close to 33% of the tape. However, top of book liquidity was extremely poor, tracking at -60% compared to the 20dma. The market was active across rate-sensitive pockets, specifically Fins (REITS + large cap) and Utes.

Rate-Cut Expectations and Treasury Yields

Interestingly, rate-cut expectations to year-end 2024 (and 2025) are lower post-Fed crisis-cut. The market still expects 3 more cuts in 2024 and four more on top of that in 2025. Treasury yields were mixed, with the short-end outperforming. This extended the bear-steepening in the yield curve from yesterday's comments by the Fed. The 2s10s is now at its steepest since June 2022.

10 Reasons for Bear Steepening of the US Treasury Curve

Alyce Andres of Bloomberg noted that comments from The Fed supported bear steepening of the US Treasury curve. Here are 10 reasons why bond investors believe the Fed’s actions telegraphed a hawkish cut:

Crypto and Gold Prices Rise

Bitcoin prices rose, testing one-month highs at $64,000, right at the 200DMA (after breaking above the 50- and 100-DMA). Ethereum outperformed Bitcoin for the first time in nine days. Gold prices also rose, reaching record highs.

Crude Prices Continue Rally

Crude prices continued their rally from three-year lows, with WTI breaking above $72. However, bonds and stocks remain in separate worlds since the last FOMC meeting in July.

Bottom Line

It's clear that the market is in a state of flux following the recent rate cut and the start of the easing cycle. With stocks, gold, oil, and crypto prices all seeing a rise, it's a time of opportunity for many investors. However, with rate-cut expectations lower and treasury yields mixed, there's still a level of uncertainty in the market. What are your thoughts on these market movements? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, every day at 6pm.