According to Citigroup, the revenues from trading fixed income securities has been decreasing since the end of the global financial crisis, but this trend might very well be reverted soon as investors are desperately trying to protect their assets from erosion.
30Y yields are back below 2.50% - the lowest level since last Thursday's yield-ramp (following consecutive weak auctions) - as ADP data showed a lot less exuberant escape-velocity-ness than expected. The entire bond complex is seeing yields tumble post-ADP, extendionb the drop from the overnight session which did not bounce back like stocks...
Gold was essentially flat with a fall of just $2 or 0.0017% in dollar terms in the quarter. While gold was essentially flat in the quarter in dollar terms, it is important to note that gold was 11% and 5% higher in euro and sterling terms - building on the respective 13% and 6% gold price gain seen in 2014.
"The time may have come to seek a solution to the drop in liquidity that is a side effect of the BOJ's large-scale JGB purchases," BofAML says.
It has been another whiplash, rollercoaster, illiquid session which saw US equity futures tumble early overnight driven by a bout of USDJPY and Nikkei selling, only to regain all losses as European, and BIS, traders walked in, and promptly BTFD. In fact at last check, it was as if all the fireworks that took place just a few short hours ago and sent the ES as low as 2037, and below what has become the key support level, the 50-DMA never happened.
While we doubt that the ECB will, of its own volition, elect to scale back PSPP out of a highly uncharacteristic respect for sanity and prudence, there are a variety of factors which could lead to a forced taper. Some market participants are already betting that the ECB scales back purchases by the end of the calendar year.
"The utterances of the Yellen/Zhou duo who kicked off yesterday’s rip make absolutely clear why the central bankers will never stop stimulating. They have embraced a spurious “inflation deficiency” doctrine, and have thereby, in effect, lashed themselves to the wheel of a doomsday machine."
The Fed may engage in a symbolic rate hike... but we will not enter a truly hawkish period... not when the TBTFs have $551 trillion in interest rate based derivatives outstanding.
TWTR VAGUE CHATTER OF GOOGL IN TALKS TO ACQUIRE 30% STAKE
"The overnight general collateral rate jumped to 0.38% this morning. The GC rate has seen sharp moves at quarter end in the past, although today's jump is the largest we have on record."
- Iran, powers push for nuclear deal as clock ticks toward deadline (Reuters)
- How DIY Bond Traders Displaced Wall Street’s Hot Shots (BBG)
- MillerCoors Caught in a Downdraft (WSJ)
- Saudi-led strikes again hit Yemen overnight (Reuters)
- Even With Free Money, Merkel Still Reluctant to Spend (BBG)
- Britain Uses Tax Breaks to Lure Digital-Game Developers (WSJ)
- China to Insure Deposits in Move Toward Scrapping Rate Curbs (BBG)
- As China Expands Its Navy, the U.S. Grows Wary (WSJ)
Did stocks window dressing come one day early in this volatile, bipolar, stop-hunting, HFT-infested market? Looking at futures this morning, which are down about 12 points already on yet another surge in the USD which has sent the EURUSD just above 1.07, the lowest since March 20 , and the USDJPY back under 120 now that the "strong dollar is bad for stocks after all" algo seems to be back from vacation, all those hedge funds who chased risk higher yesterday because their peers did the same, may find they are all selling on the way down. It will be oddly ironic if all of yesterday's widely touted gains evaporate comparably in the first 10 minutes of trading today, and lead to an end in the longest streak of quarterly increases in two decades.