Bond Fear Fell 4.2% and Stock Fear 4.7% the Day Before the Fed Decides

Bond Fear Fell 4.2% and Stock Fear 4.7% the Day Before the Fed Decides Both volatility indices closed at their lowest since 21 October, the Nasdaq 100 rose 1.3% with 6 of 11 sectors down, and the committee reports at 18:00 UTC

The Federal Reserve publishes a statement at 18:00 UTC and its chair takes questions at 18:30 UTC. Insurance against either is supposed to get dearer the night before. On Tuesday it got cheaper in both markets at once: the VIX, the price of being wrong about stocks, closed 17.52, down 4.73%; the MOVE index, the price of being wrong about Treasuries, closed 97.88, down 4.22%. Each closed at its lowest since 21 October. The relay this book prints by direction only has a hold heavily favoured today and a hike favoured by December; it has not updated since Tuesday morning.

Scorecard, FOMC eve. Policies: 2. Premiums: down 4.7% and 4.2%. Fire drill: 18:00 UTC. Rated: fine.

Elsewhere the Nasdaq 100 rose 1.29%, the chip funds 3.91% and 3.02%, AMD 5.46%, and 6 of the 11 sector proxies fell. The S&P 500 rose 0.60%. The sector count is on the proxies, not the index itself, and this book has no scale to put the two on, so it reports both and declines to weigh them. Boeing fell 10.69% after a release stamped 11:58 UTC, before the open, which for once puts the cause in front of the effect; the Dow closed 15.99 points higher on the same day. This book holds no divisor, so it will not tell you what Boeing cost the index, or whether it cost it anything.

Now the why, with the search attached. Routes read: the TheStreet live blog, Schwab’s 13:12 UTC update, the Zacks wrap, the Dow Jones wires. Stamps found: Nvidia putting 3 billion dollars into Meta’s equity offering at 13:12 UTC, and the Anthropic filing narrative carried over from Monday, first stamped on Tuesday at 13:38 UTC. Test run: the Nasdaq 100 gapped 35.39% of its day at the open and made the other 64.61% after it. The Nvidia stamp sits before the bell and can touch the gap at most; the Anthropic narrative is Monday’s story re-stamped eight minutes into the session, and this book holds no index path to set it against. Neither carries the 65%. 65% of the Nasdaq 100’s rise has no named cause in this book. The Nvidia headline was loud, and the company it was about, Meta, fell 1.65% on 1.66 times Monday’s volume. A coincidence, published as such.

One receipt, and it is this book’s own. Yesterday it printed the Anthropic filing under a speculation heading, said it could carry Monday’s opening gap and nothing after it, and said a future edition would confirm or bury it. Tuesday’s follow-through: the chip funds kept running, up 3.91% and 3.02%, and the two hyperscalers the wires named did not, Microsoft 0.24% lower and Meta 1.65% lower. Half a receipt. It goes in the ledger as half.

December WTI settled 99.90, down 1.83%, its first close under 100 since 22 October. Wires about Qatar’s efforts in Tehran were on the tape; this book cannot test them against a barrel path it does not hold. By the 07:40 UTC bar it was 102.13 and by 09:25 UTC 101.90, 2.00% above the settle. The under-100 barrel did not survive the night. General Motors rose 5.54% and the wire credited a listing switch to Nasdaq stamped 14:14 UTC; the shares had already opened 3.2% higher at 13:30 UTC, so the headline arrived after 57% of its own effect and is not named as a cause.

After the bell, on relays with no exchange bars behind them, Seagate was reported 7.3% lower, NXP about 9% lower, Enphase about 16% lower and Robinhood 5% lower, with Visa 1.2% lower for company. Nasdaq futures were 0.38% higher at the 07:45 UTC capture; Seoul closed sharply higher on syndicated reports after a chip maker’s quarter, no level printed. Things that fell after the bell: Seagate, NXP, Enphase, Robinhood. Things that noticed: not the futures.

No index-level cause was identified in the making of this session.

The One That Mattered

The one number is a pair: the VIX fell 4.73% and the MOVE index fell 4.22% on the session before a Federal Reserve decision, and both closed below every level since 21 October. The textbook has implied volatility rising into a scheduled event, because the event is the risk. The tape had it falling in both the stock and the bond market at once, on a day the Nasdaq 100 rose 1.29% and 6 of 11 sector proxies fell. No stamp in this book precedes the fall in either index, so it has no named cause here. Two readings fit it: the market has already read tonight’s statement, or it has stopped paying for the right to be wrong about it. They are readings, not causes. This book can measure the premium. It cannot measure the confidence.

Why did the price of insurance against the Fed fall 4% in bonds and in stocks the day before the Fed decided anything? We went down the rabbit hole in today’s Macro Edge. https://antivestor.com/macro-edge

Stock Market Edge

Chips Rose 3.9%, 6 Sectors Fell, and the Nasdaq 100 Called It a 1.3% Day A 3.75 point sector spread, a 33rd session of the 20-year on top, and a premarket that stayed inside the band

Premarket snapshot:

On the 07:45 to 07:50 UTC capture bar, read twice on all four December contracts, S&P futures were 7,758.75, 0.01% above Tuesday’s 7,758.25 settlement; Nasdaq futures 29,925.50, up 0.38%; Dow futures 52,414, down 0.31%; Russell futures 2,821.60, down 0.24%. The S&P contract ran 7,752.25 to 7,766.50 since the Tuesday reopen, which is not a range, it is a corridor. The VIX’s 07:45 UTC global-hours bar read 17.56 on a feed about fifteen minutes behind. Re-quoted on the 08:30 UTC bar, S&P futures were 7,762.75 and Nasdaq futures 29,938.50, up 0.42%, inside the 0.3 to 0.6% band and 0.18 points short of leaving it.

Sector rotation:

Five of eleven sector proxies rose and six fell on a day the S&P 500 rose 0.60% to 7,722.60. Technology 1.70%, discretionary 1.04%, materials 0.78%, utilities 0.71%, industrials 0.58%; health care 0.06% lower, financials 0.25% lower, communication services 0.26% lower, real estate 0.84% lower, staples 0.92% lower, energy 2.05% lower. Spread 3.75 points, inside the 4.00 line. The semiconductor funds rose 3.91% and 3.02%, 0.89 points apart and above the 0.10 line of the shot filed on 21 October: five sessions scored, none against it. New York counted 1,570 risers to 1,127 fallers and 53.17% of its volume traded in rising issues, 43.38% on Monday; Nasdaq 3,172 to 1,716, with 84 new lows against 50 new highs.

Earnings or guidance:

Boeing 10.69% lower on 6.09 times volume, SoFi 13.42% higher on 3.72 times, UPS 5.75% higher, Royal Caribbean 5.46% higher, all on pre-market releases; this book holds stamps for Boeing and SoFi and a 12:49 UTC pre-market list naming UPS and Royal Caribbean. After the close: Visa reported adjusted earnings of 3.48 a share and was marked 1.2% lower; Teradyne guided the fourth quarter to 1.95 to 2.25; Seagate, NXP, Enphase and Robinhood are in the letter above with their stamps. Microsoft and Alphabet report after today’s close.

Cross-asset nuance:

Three of fourteen Treasury tenors rose, eight fell, three held. The 1-year 4.50%, up 3 basis points; the 2-year 4.70%, up 2; the 10-year 4.99%, down 1; the 20-year 5.34%, down 1 and the top of the curve for a 33rd consecutive session; the 30-year 5.30%, down 1. 2s10s 29 basis points from 32: the front rose and the back eased, the day before the people who set the front say anything. The three-month VIX read 19.57 against 17.52 spot, a ratio of 0.90, contango. The dollar closed 102.37, up 0.33%; dollar-yen 157.95. High yield rose 0.52% and long Treasuries fell 0.06%, which on the durations this book holds reads as spreads tightening. December WTI 99.90 at settlement and 101.90 at 09:25 UTC; December Brent 113.88, January 109.41. Gold spot 4,059.45, up 1.07%; December gold 4,074.60; December silver 54.51; December copper 6.65, up 1.69%. Tuesday’s 5-year auction stopped at 4.85% on a calendar relay; the Treasury’s own feed carries no record of it, nor of Monday’s 2-year, so no cover and no shares are printed.

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Crypto Market Edge

Up 0.92%, 1 Issuer in the Flow Row, and an Ether Table Stuck in July Bitcoin 80,776.86 on the midnight mark, 81,550.16 by the re-quote, and a route that served the wrong year six times

Price snapshot:

Bitcoin marked 80,776.86 at 00:00 UTC, up 0.92% on Tuesday’s 80,040.16, and read 81,550.16 on the 08:35 UTC bar, 0.96% above the mark; Coinbase marked 80,799.51, 0.03% apart. Ether marked 2,346.58, up 1.08%, and read 2,377.29, 1.31% above its mark.

Flows and positioning:

Monday’s US spot bitcoin fund row shows 110.3 million dollars of net inflow: IBIT 110.3 million, the other eleven issuers printed zeros, two reads agreeing and the row reconciling. Complete by the arithmetic, carried as complete. Tuesday’s row is twelve dashes, which is an absence and not a quiet day. Cumulative net flow 57,361 million. The ether page served a launch-era fragment on six attempts, so no ether row is held and the cumulative stays frozen at 12,748 million. The ether table has taken up nostalgia.

Leadership and rotation:

The shot filed on 20 October on ether issuer concentration stays at three scorable sessions, two against it, because the route failed and the session did not get a hearing. On the crypto board at 07:36 UTC PEPE ranked first, bitcoin second at a canonical sentiment score of 25 on 685,081 watchers, and a tokenised gold tracker with 503 watchers third; ether, Solana and Cronos left the top five.

Catalysts and roadmap:

Today: FOMC statement 18:00 UTC, press conference 18:30 UTC; Bank of Canada 13:45 UTC. Thursday 12:30 UTC: Q3 GDP advance and September PCE; ECB 13:15 UTC; 7-year auction 17:00 UTC; Strategy’s results. Friday 03:00 UTC: Bank of Japan. Tuesday’s flow rows want a second read.

TL;DR

• The VIX fell 4.73% to 17.52 and the MOVE index 4.22% to 97.88 the day before the FOMC statement, both at their lowest close since 21 October.
• The Nasdaq 100 rose 1.29% and the chip funds 3.91% and 3.02% while 6 of 11 sector proxies fell; 65% of the gain has no named cause here.
• Boeing fell 10.69% on a release stamped before the open and the Dow closed 15.99 points higher; this book holds no divisor and attributes nothing.
• December WTI settled 99.90, its first close under 100 since 22 October, and read 101.90 by 09:25 UTC; energy was the worst sector at 2.05% lower.
• Bitcoin marked 80,776.86, up 0.92%, and read 81,550.16; Monday’s fund row was IBIT alone at 110.3 million and the ether page served July on six reads.

Fun Fact

The 20-Year Bond Spent 34 Years Not Existing The tenor that has topped the curve for 33 sessions was discontinued in 1986

The Treasury stopped issuing 20-year bonds in 1986 and brought them back in May 2020. The reissued tenor has now closed above every other published maturity on each of the last 33 sessions, which for a bond that spent three decades on the shelf is a strong second act.