Cooling inflation data dominated the price action this week.
July fully-priced-in for a 25bps hike and then nothing to year-end, and then beginning to price in a rate-cut in Jan '24
That dovish shift sent the dollar reeling lower and everything else soaring.
ZeroHedge, however noted the rally may be finally slowing:
The mega-short-squeeze (up 15% in 6 days) seemed to end today as 'most shorted' stocks were sold and couldn't catch a bid...
While the week was exuberant in stocks, we do note some anomalies today with NVDA giving up its earlier panic-bid to record highs and ending in the red..
Meme stocks melted up for 6 straight days but today saw that fun-and-games come to an abrupt end.
Sectors/Technicals
Nasdaq and Small Caps outperformed on the week
Energy lagged while base metals roared. Peculiar but noteworthy
Commodities:
Metals carried the week
Energy was mixed with Crude strong net on the week, but Nat Gas softer again
Silver's big gains relative to gold slammed the Gold/Silver ratio down to 2023 lows
Bonds:
Treasury yields were down significantly on the week (biggest weekly drop in yields since March)
The curve slightly uninverted/ normalized more between the 5/30 spread
Crypto:
Ripple reacted to news declaring it is not a security for personal ownership but is one for institutional ownership
Alts benefited at Bitcoin’s expense
Bitcoin pushed up near $32,000 on Thursday and then plunged back near $30,000 Friday
2. Silver CTA Alert
There is something going on in metals at the retail level. Silver and Platinum long exposure by CTAs has exploded, even while they have remained short Copper and Palladium. The attached charts paint a picture. Here is the story.
Look at the spike in CTA platinum longs with barely a nudge in Palladium
Silver CTA longs had been piling in even before the run up this week, while their shorts in Copper simultaneously got closed.
Now Look at the Spike in Silver CTA longs, even while Gold longs are net small sellers. Note the little arrow. Last time Silver OI got this high, The metal topped out. While that is a risk this time, the longs are making money so far. Assume they area little more patient for now.
This behavior itself is not foreign. CTAs will buy Silver in anticipation of Fed easing and when they also get bullish stocks. And right now, rate behavior and stocks are indicating increased hope for the Fed to stop hiking “permanently” after July. Last year this was the opposite of how they behaved.
