Gold Surges To New Record High After Hot PPI As ECB/WSJ Trigger Dollar Dump

By Tyler Durden of ZeroHedge

Thursday, September 12, 2024 6:20 PM EDT

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Image Source: Unsplash

ECB cut rates by 25bps as expected (along with a stagflationary cut to growth and hike to inflation forecasts) but all eyes were on US data. A hotter than expected PPI followed the hotter than expected core CPI pushed rate-cut expectations lower (although jobless claims fell). Interestingly, rate cut expectations for 2024 jumped after the ugly 30Y auction and WSJ Fed-whisperer Nick Timiraos comments (which were entirely useless, merely stating that policymakers were considering whether to cut by 25bp or 50bp)...

Source: Bloomberg

As the chart above shows, the shift in rate cut expectations was away from 2024 and into 2025 today... even though Sept rate-cut odds shifted dovishly after Timiraos (erasing all of yesterday's CPI-driven hawkish shoft)...

Source: Bloomberg

...and despite the hawkish shift in US STIRs, the dollar dumped as EURUSD rallied after The ECB statement had a smidge of hawkishness (about domestic inflation fears) and then the WSJ comments accelerated the decline...

Source: Bloomberg

...the dollar weakness drove gold to a new record high above $2550...

Source: Bloomberg

Small Caps (big short squeeze) and Mega-Cap tech (safe haven flows and NVDA) dominated the equity indices today with the Dow lagging (but still higher)...

'Most Shorted' stocks dipped and ripped...

Source: Bloomberg

...and Mag7 stocks extended their rebound...

Source: Bloomberg

Goldman's trading desk noted that they were seeing the market "quiet flow wise with volumes muted and S&P top of book tracking lower."

Our floor is -3% better for sale with HF’s $120mm net for sale (Short sales are outpacing long sales) and LO’s $250mm net to buy. LOs buying Hcare and Tech vs HFs selling Discretionary + macro Products.

Back to bond land, yields were higher across the curve (with the long-end marginally underperforming - 30Y +3bps, 2Y +1bp) leaving rates back to unchanged on the week...