With seven little words, Fed Chair Powell unleashed some chaos today as he confirmed “time has come for policy to adjust” and rate-cut expectations adjusted dovishly (though we note they were pretty much fully priced for this after the Minutes).

September rate-cut expectations rose to 32bps (so around a 1/3rd chance of 50bps, 2/3 chance of 25bps)…

Source: Bloomberg

2024 rate-cut expectations lifted to 104bps (just over 4 full cuts – well above the single-cut according to The Fed’s Dot-Plot) and 213bps thru the end of 2025…

Source: Bloomberg

Gold, bonds, and stocks rallied while the dollar tumbled…

Source: Bloomberg

The instant bid in stocks only really held in Small Caps…

…thanks to a huge short-squeeze…

Source: Bloomberg

The dollar crashed to 2024 lows…

Source: Bloomberg

Treasury yields tumbled, led by the short-end today (2Y -10bps, 30Y -2bps) and down 14bps on the week…

Source: Bloomberg

The 2Y yield snapped back below 4.00% and the curve (2s30s) pushed notably steeper…

Source: Bloomberg

Bitcoin blasted off on the Powell headlines, setting the scene for the big short-squeeze we have discussed and testing $64,000…

Source: Bloomberg

Crude oil prices also surged, bouncing further off those early August lows…

Source: Bloomberg

Finally, we note that five of the six Powell Jackson Hole speeches saw the S&P 500 drop 7.5% on average in the next three months…

Source: Bloomberg

…and The Fed will begin cutting rates with the MSCI All-World Stocks Index at an all-time record high!!!

So brace!