Bonds & Big-Tech Bloodbath: Mag7 Meltdown Accelerates As Yield Curve 'Dis-Inverts’ To 2-Year High

Ugly Micro (Mag7 earnings fail to impress…enough) and Ugly Macro (home sales and manufacturing meltdown) left an Ugly day for stocks and bonds (the long-end) while the dollar, crypto, and commodities were all relatively unch by the close.

As UBS notes, similar to last Wednesday, today seems very much an Equity event which suggests that technicals and positioning are the major drivers.

All the major US equity indices were lower today but mega-cap tech was hit hardest, smashing Nasdaq down over 3.5% for its worst day since Dec 2022. Ugly close did not help at all. The Dow was the least ugly horse in the abattoir today…

The S&P 500 'no-2%-drop’ streak is over…

The Mag7 basket of stocks suffered its biggest daily loss since Oct 2022 (having lost almost $1.75 trillion in market cap from their highs 10 days ago)…

Source: Bloomberg

All 7 of the Mag7 were lower today (unusual in itself)…

Source: Bloomberg

The focus for selling pressure appeared on Google’s inline/reiterating capex is causing concern in some of the AI pockets of the market with VRT – 10%, AI Semis (GSCBSMHX) -420bps, Data Centers (GSTMTDAT) -330bps.

Source: Bloomberg

Goldman Sachs trading desk noted that volumes were explosive today (tracking +18% vs the trailing 20 days). Liquidity remains in focus with S&P top of book avg ~$13mm today (this has almost HALVED in the past week).

• LOs driving most of our supply tracking -8% better for sale (Tech, Fins, and Industrials with the largest sell-skews). LOs buying Hcare + Discretionary.

• HFs also better for sale led by supply in Tech, Industrials, & Fins. Short ratios elevated across Utes and Cons. Discretionary. Seeing HF buying in Hcare.

But the pain didn’t end in stocks as the long-end of the Treasury curve was clubbed like a baby seal…

Source: Bloomberg

The yield curve is inflecting rapidly with 2s30s at its most disinverted since July 2022 (and 5s30s at its steepest since May 2023)…

Source: Bloomberg

Rate-cut expectations pushed higher again today with 4 full cuts priced back inf or 2025 (and a 50-50 chance of 2 or 3 cuts in 2024)…

Source: Bloomberg

The dollar ended the day basically unchanged, rallying during the US session, recovering European losses…

Source: Bloomberg

Major Yen carry unwind continues…

Source: Bloomberg

Gold was a mirror of the dollar with overnight strength sold during the US session to basically end unchanged…

Source: Bloomberg

Another strong day for ETH ETF volumes…

Source: Bloomberg

…but ETH underperformed BTC, reversing yesterday’s outperformance…

Source: Bloomberg

Oil prices limped higher off their 200DMA but remain near six-week lows…

Source: Bloomberg

It’s different this time…

Source: Bloomberg

Right?