Bitcoin, Bullion, & 'Biggest Shorts' Blast Higher To End 'Bad Data' Week

Inflation macro data surprised to the upside, while growth macro data disappointed, hinting at stagflation. Despite this, stocks rose for the fifth straight week, with Small Caps experiencing a significant surge. The "most shorted" stocks saw a massive squeeze higher. In contrast, Chinese stocks witnessed their greatest volatility since 2015, with a combined loss of almost $500 billion in mainland and Hong Kong markets. The CSI 300 Index's weekly trading range surged above 600 index points for the first time since July 2015. This time, the turbulence is driven by sluggish consumer demand, threatening China's growth ambitions. Financial conditions have loosened to their easiest since November 2021, contributing to the rise in macro surprise data. The VIX is expected to remain elevated, and the vol term structure is upward-sloping into the election and FOMC meeting. Treasury yields were mixed, with the short-end outperforming and the yield curve steepening by the most since August. Rate-cut expectations rose modestly, with a focus on 2025, and the dollar rallied for the second straight week.