As the TBAC explained one year ago, pensioners (first in Denmark, soon everywhere else) have the Fed and other monetizing central banks to thank for losing their "purchasing power" as a result of the central banks' sequestration of high quality collateral, i.e. bonds with duration to record levels, and the resulting collapse in bond market liquidity. Well, things just got worse today, when as the following chart courtesy of Nanex showed, liquidity in the ZB future took a step function lower on the Russian news. Expect even further contraction in liquidity in the coming weeks and months, which in turn will mean that soon the world's "deepest" market may have all the liquidity of CYNK... and all the volatility as well.
Having plunged at 8amET on no news whatsoever... gold futures have recovered the entire drop on Ukraine-Russia escalation.
Europe Says Would Consider Any "Unilateral Military Action By Russia A Blatant Violation Of International Law"Submitted by Tyler Durden on 08/15/2014 - 11:53
While we await to see any actual proof of either a Russian armed convoy entering Ukraine territory, or that this convoy was shelled by Ukraine artillery, because as a reminder this is first and foremost a war of relentless propaganda on all sides, here is the latest from Europe, which moments after stating it may roll back sanctions just announced it is now considering even more actions against Russia. From Reuters:
- EU FOREIGN MINISTERS SAY WOULD CONSIDER ANY UNILATERAL MILITARY ACTIONS BY RUSSIA IN UKRAINE AS BLATANT VIOLATION OF INTERNATIONAL LAW
So far the only official comment that is missing is that of Russia which has vehemently denied any entrance by an armed convoy into Ukraine and has yet to have any direct statement on the alleged destruction of its assets in Ukraine.
News of the Ukrainian destruction of part of a Russian military convoy sent European stocks (and bond yields) plunging. German DAX futures lost all the gains from the US close last Friday as 2Y bonds closed at -1bps and 10Y bunds at a record low 96bps. European equity indices all lost significant ground on the news today but generally held on to some gains on the week. Peripheral bond spreads pressed wider today but ended the week lower (Spain -5bps, Portugal -25bps). High yield spreads jumped over 20bps on the news. Europe's VIX soared over 20 today (from 16 earlier).
"The parties coordinated their actions on the response to the information regarding the entry of Russian military machines to the territory of Ukraine that has been clearly witnessed by international journalists, particularly of "Guardian" newspaper. The President informed that the given information was trustworthy and confirmed because the majority of that machines had been eliminated by the Ukrainian artillery at night."
It appears the pain that Europe is already suffering post-Russian sanctions, is too much to bear (as we explained here). While NATO admits it saw Russian military forces cross the Ukraine border, European leaders, after discussions on widespread 'aid' for nations suffering from Russia's food ban, have said they are 'ready to review Russia sanctions' if the situation stabilizes. Furthermore, snubbing Washington, European leaders said they do not want to impose more sanctions on Russia. Obama alone again?
In July, the gain in durables was led by an increase of 10.1 percent in the index for motor vehicles and parts, which was the largest since the index jumped 26.9 percent in July 2009. In other words, when it comes to the US economy, subrpime is the new "cash for clunkers" as can be seen on the chart below.
Unpossible! With stocks at record highs and unemployment plunging (according to the government's data and talking heads), how is it possible that University of Michigan Consumer Confidence has collapsed to its lowest since November, missing extrapolated expectations by the most since 2006? We suspect you know the answer...
UPDATE: *FERGUSON POLICE SAY OFFICER DARREN WILSON SHOT MICHAEL BROWN - Police suggest Brown was primary suspect in earlier robbery incident.
Following much consternation yesterday after Anonymous 'announced' the possible name (Bryan Willman) of the police officer who shot and killed Mike Brown in Ferguson; Police Chief Thomas Jackson is about to announce the details... Forty-five percent of US citizens don’t trust in justice amid police killings of civilians, according to a poll by HuffPost, with Sixty-nine of black Americans thought the officers used lethal force too frequently,
Canada Releases Atrocious Jobs Data; Then Revises It Above The Highest Estimate Following Public OutcrySubmitted by Tyler Durden on 08/15/2014 - 09:08
This morning it was take two for the Canada jobs print, which was as follows: In July, Canada employment increased 41.7K in July according to Statistics Canada, from -9.4K in prior month. This was about 41K higher than the previous "erroneous" print, and double the original estimate: high enough to make everyone happy. In fact, it was so high, it surpassed the highest range of the forecast, which topped out at 41.4K based on 20 economists.
The outbreak of Ebola virus disease in West Africa continues to escalate, with 1975 cases and 1069 deaths reported from Guinea, Liberia, Nigeria, and Sierra Leone, according to the WHO, but warns that "there is evidence that the number of reported cases and deaths vastly underestimate the magnitude of the outbreak." While Nigeria remains 'contained' for now, Ireland now has its first suspected case of Ebola according to The Journal. What is perhaps most concerning is Doctors Without Borders warn the ebola outbreak is "moving faster" than they can handle.
Producer Prices Slide Driven By Biggest Plunge In Energy Since November 2013, Core PPI Rises Most Since MaySubmitted by Tyler Durden on 08/15/2014 - 08:47
Following another monthly surge in the June PPI print, when it rose by 0.4%, or the second highest amount in a year, the July headline reading was a far tamer 0.1%. This was driven entirely by the plunge in energy prices (supposedly due to the Iraq military incursion and the "de-escalation" of the Ukraine civil war), which resulted in a -0.6% plunge in energy costs, which was the biggest monthly drop in over a year, matching the decline recorded in November of 2013. Offsetting the energy drop was a 0.4% increase in food prices, following two months of -0.2% decline. When stripping the volatile, and easily manipulated asset prices linked to brent, crude and the like, core PPI ex food and energy rose by 0.2%: the highest since March.
Despite serial extrapolators expectation that last month's 4-year high Empire Manufacturing data would continue to rise, it didn't - instead falling by the most since June 2012 to 14.69 (from 25.6). This is the biggest miss in 4 months. The number of employees and new orders tumbled as inventories collapsed. Of course, when current sentiment plunges, hope comes alive... the surge in 'hope' for 6 months from now to its highest since January 2012.
Despite NATO's warnings of Russian escalation in Ukraine, 8amET was a far bigger catalyst for precious metals this morning as the once ubiquitous morning meltdown is back. With gold relatively flat and Treasury yields down 10bps after a 60 point S&P surge, maybe this is catch-down but the heavy-volume plunge in Gold and Silver is notable in that USDJPY appeared to jerk higher at the same time.