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Dollar Carry Flips, VIX Now Tracking DXY, Stocks Pretending To Care About Bonds

Tyler Durden's picture




 

Remember the JPY carry trade: long the Dollar and short the Yen? That was then. This is now.

Another interesting observation is that the VIX now seems to be tracking currency risk, instead of the market (seems nobody cares about equities any more).

Lastly, bond yields are hitting intraday lows while the stock market is
being floored by HAL9000 thinking the sideways VWAP will persist until
3 pm (and is likely correct).

 

 

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Mon, 08/31/2009 - 13:30 | 53983 deadhead
deadhead's picture

I see that Rosie has  3.30ish as a critical tech level for the 10y....we're getting close.

 

Mon, 08/31/2009 - 13:51 | 54028 Miles Kendig
Miles Kendig's picture

then it will be time to go on back to 3.80+/-.

Rinse & repeat

Mon, 08/31/2009 - 13:36 | 53994 Joe Sixpack
Joe Sixpack's picture

Currency risk is where we are at. Look for a currency crisis near you soon.

 

www.RevokeTheFed.com

Mon, 08/31/2009 - 15:29 | 54225 mgarrett84
mgarrett84's picture

Agree with FX risk existing below the surface and ready to emerge.  One currency in particular will get pounded.  But I wont tell which one.  But the anti fed sentiment is a little goofy imo. 

Mon, 08/31/2009 - 20:33 | 54647 Joe Sixpack
Joe Sixpack's picture

"But the anti fed sentiment is a little goofy imo. "

 

The Fed is pretty central to the financial collapse we are experiencing. Care to elaborate?

Mon, 08/31/2009 - 13:42 | 54006 slore
slore's picture

link the bigger version!

Mon, 08/31/2009 - 15:14 | 54193 Tyler Durden
Tyler Durden's picture

done

Mon, 08/31/2009 - 15:16 | 54196 slore
slore's picture

right on, thanks

Mon, 08/31/2009 - 13:46 | 54015 lizzy36
lizzy36's picture

looks like dennis kneale got some new hair plugs, a dye job and a bit of botox. that ought to help those 8pm ratings...

Mon, 08/31/2009 - 13:51 | 54027 Jeanbon
Jeanbon's picture

It is all about those financials who once again keep

the markets from selling-off. Today, in Europe, once

again huge buying interest in UBS. But i have heard

that Fund Managers are buying the stock because of

Index adjustments in the MSCI and SMI. 

 

So once again a good example of non sense buying in the

financial sector.

Mon, 08/31/2009 - 13:51 | 54029 RobotTrader
RobotTrader's picture

Bonds exploding higher.

Always a bid on these from fearful stock investors.

Mon, 08/31/2009 - 13:52 | 54033 Rari Nantes In ...
Rari Nantes In Gurgite Vasto's picture

the real currency risk out there is a substantial revaluation of CNY. it will send some serious shock waves around the financial markets. Will they do it at this point? maybe and speculation were floating around for a possible near move to be reason why Oby came out of vacation to re-appoint Berny.

Mon, 08/31/2009 - 15:51 | 54286 mgarrett84
mgarrett84's picture

China needs to make sure the consumer is conditioned enough to use their new found purchasing power.  And it doesnt totally make sense to stockpile resources if they were going to readjust RBM in the nearterm.  

Mon, 08/31/2009 - 13:57 | 54045 Jeanbon
Jeanbon's picture

what disturbs me is the correlation on USDJPY. 

A sell-off in USDJPY would probably spark a sell-off

in US equities. But a sharp rise in the DXY was allways

bad for equities. Maybe I have just to watch EURJPY,

as a proxy for the S&P500 or not?

 

Mon, 08/31/2009 - 13:58 | 54047 RobotTrader
RobotTrader's picture

After the 2008 debacle, nobody dares to go dating on the NYSE without protection.

Condoms being purchased en masse....

Mon, 08/31/2009 - 18:25 | 54266 Yu8t (not verified)
Mon, 08/31/2009 - 14:03 | 54059 Anonymous
Anonymous's picture

Am totally clueless as the gang's target for today.

Any ideas?

Mon, 08/31/2009 - 14:14 | 54074 Anonymous
Anonymous's picture

If this long-Yen short-dollar carry trade develops in earnest then that can provide the rocket fuel for our equity markets to reach Argentina style peaks. Of course that would also be setting up for an Alderaan style deflationary kaboom. That way everyone will be wrong and right at the same time :-)

Mon, 08/31/2009 - 14:18 | 54081 Anonymous
Anonymous's picture

It's a bit early to suggest that currencies are leading the other asset classes. All other correlations are holding well (equities down, VIX up, commodities down, treasury PRICES up)..today is month end and there is a ton of fixing stuff taking place in currency land. Too much going on to draw a conclusion. My bet is if equities start to sell off hard, USD rallies against all risk currencies (AUD, NZD, EUR, GBP). Although I have no idea what drives USDJPY these days...

Mon, 08/31/2009 - 15:54 | 54289 mgarrett84
mgarrett84's picture

my whole set-up is based on a lead from a select few pairs.  The lead and correlation is significant.  You might want to go outside of USD crosses for more accurate indicators.  

Mon, 08/31/2009 - 14:19 | 54082 Ivanovich
Ivanovich's picture

Time to Hal9000 ramp up:  T-minus 70 minutes and counting.

Mon, 08/31/2009 - 14:49 | 54146 Ivanovich
Ivanovich's picture

Whoops...Hal is early.

Mon, 08/31/2009 - 14:19 | 54084 Anonymous
Anonymous's picture

It's a bit early to suggest that currencies are leading the other asset classes. All other correlations are holding well (equities down, VIX up, commodities down, treasury PRICES up)..today is month end and there is a ton of fixing stuff taking place in currency land. Too much going on to draw a conclusion. My bet is if equities start to sell off hard, USD rallies against all risk currencies (AUD, NZD, EUR, GBP). Although I have no idea what drives USDJPY these days...

Mon, 08/31/2009 - 14:32 | 54114 There ya go again.
There ya go again.'s picture

Oil and DXY  seem to have disconected today.

Mon, 08/31/2009 - 15:15 | 54195 Steak
Steak's picture

I have a feeling you'll see more of this, as the DXY is heavily weighted with the Yen.  Today you're seeing the dollar sell off v. the Yen but appreciate v. risk/commodity currencies

Mon, 08/31/2009 - 15:25 | 54213 There ya go again.
There ya go again.'s picture

Thanks, I hadn't considered that...

Mon, 08/31/2009 - 14:40 | 54131 Anonymous
Anonymous's picture

HAL9000... :-) You crack me up.

Seems like the wheels are falling off the cart. Good. I'm short the S&P.

Mon, 08/31/2009 - 15:12 | 54190 Anonymous
Anonymous's picture

I just bought some FAZ. Let this sucker go down.

And whatever happened to Dying Bear?

Mon, 08/31/2009 - 18:25 | 54272 Yu8t (not verified)
Yu8t's picture

The dollar is due for an upside breakout

good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions

Mon, 08/31/2009 - 16:18 | 54346 Anonymous
Anonymous's picture

Gold,oil and silver nominally suffered against the USD as well. Didn't we see this last Sept. A race to the YEN to delever the carrytrade? And then a race to USD,treasury "safety" during the disaster. Massive deleveraging always is an ugly confusing process. Bond schlock auction week comes next week as well-so if the USG can't reprop the markets this week then they will also have to allow a selloff to continue for 2 weeks straight somehow-or pay dearly in yields. And a 2 week selloff will be a fuse on a bigger selloff into late Sept and drop-tober. What will Ben and the PPT cabal do now?

Mon, 08/31/2009 - 18:13 | 54503 Anonymous
Anonymous's picture

Gold,oil and silver nominally suffered against the USD as well. Didn't we see this last Sept. A race to the YEN to delever the carrytrade? And then a race to USD,treasury "safety" during the disaster. Massive deleveraging always is an ugly confusing process. Bond schlock auction week comes next week as well-so if the USG can't reprop the markets this week then they will also have to allow a selloff to continue for 2 weeks straight somehow-or pay dearly in yields. And a 2 week selloff will be a fuse on a bigger selloff into late Sept and drop-tober. What will Ben and the PPT cabal do now?

Tue, 09/01/2009 - 12:13 | 55073 Grand Supercycle
Grand Supercycle's picture

USD and 10 yr are still bullish and DOW/SP500 bearish.

More here:

http://www.zerohedge.com/forum/market-outlook

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