WTF Is Going On…

The markets are a little wild today and there is no specific item driving it from what we can see.

Here are a few that we are hearing

• 16th day of the shutdown and no signs of a break (chatter that it may last til Thanksgiving)

• Lengthy Putin call

• China-US trade tensions escalating

• Regional bank angst – Zions and Western Alliance down big on loan losses.

• US funding market stress –  The  most important indicator, as always, remains the SOFR rate: should the  recent drift higher continue, the self-fulfilling cascade of a liquidity  shortage will almost certainly be activated.

WTF is going on…

Stocks are tanking…

2Y yields are suddenly collapsing…

Gold is going vertical (up)…

And crypto is going vertical (down)…

If we had to guess, we would say this is mostly related to the funding stress finally being recognized by a broader set of market participants as it seems demand for ‘good’ collateral is on the rise (gold and short-dated bonds) and leveraged risky assets are dumped.