"Bullard Bomb" Sparks Quad-Witch Chaos, Yield Curve Collapse

The week explained (by CNBC narrative)...

Wednesday - Fed was shockingly hawkish

Thursday - on second thought the Fed was dovish

Friday - these hawk monsters know nothing

Because St.Louis Fed Chair Jim Bullard uttered some truth bombs...

..."it's natural that [The Fed] has tilted a little bit more hawkish,"

...there "is some upside risk on the inflation forecast,"

"Fed Chair Powell has opened the taper discussion this week."

..."little concerned about housing market froth", noting that The Fed "is leaning toward idea that it may not need to be buying MBS," adding that "we don't wanna to get back in the housing bubble game... that caused us a lot of distress in 2008."

And that left chaos in its wake as reflation bets were derisked en masse. And if The Fed's policy is to ensure 'financial stability', then they failed this week (even if Bullard's goal was to blow the "froth" off the hyped-up-inflationary asset values).

Source: Bloomberg

Did Powell just "meddle with the primary forces of nature" one too many times?

Small Caps and The Dow were the week's biggest losers. Nasdaq managed to hold gains on the week...

Dow suffered its worst week since Oct 2020.

Some serious gamma swings this week...

Dow, S&P, and Small Caps all broke below their 50DMAs...

The Russell's underperformance took it back to its lowest relative to Nasdaq since mid-April...

Which put a different way leaves Russell 2000 at a critical support point once again...

Source: Bloomberg

FANG stocks surged to a new record highs as the chaos hit...

Source: Bloomberg

The rotation out of Value (into Growth) was dramatic...

Source: Bloomberg

And momentum got hit this week...

Source: Bloomberg

Bullard's extremely hawkish comments sent rate-hike expectations soaring to price in at least one hike before the end of 2022...

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