Bond

The Real 'Fear' Index Just Went To '11'

A funny thing has happened below the surface of the markets since late last year. As first The Fed, then The BoJ, and The ECB respectively saw their credibility crushed into a mumbling excuse pool of elite utterances as global bond yields crashed along with global growth and inflation expectations, professional investors have been busily buying crash protection.

BofA: To Save Markets Central Banks Just Made Inequality And Populism Even Worse

"Today’s extraordinary monetary policy backdrop is likely adding to voter angst and exacerbating the theme of rising wealth inequality, rather than reducing it.  The irony of recent events is that the combination of risk-off sentiment and expectations of further central bank support has caused another surge in negative yielding debt…which will only compound the issues of wealth inequality and populism."

- Bank of America

"Panic May Have Passed... But This Is Far From Over"

Don’t read too much into the relief rally of the past 24 hours, warns Bloomberg's Mark Cudmore. While the initial panic may have passed, markets are very far away from having fully priced the impact of the referendum. For a start, there’s still little firm grasp of exactly what the impact will be...

Scandal Erupts At Euro Summit Over Scotland, While Draghi Says In "No Rush" To Ease Policy

Moments ago, a mini scandal erupted at the Euro summit, when in an attempt to infuriate the UK some even more, Juncker said that “Scotland won the right to be heard in Brussels." What he did instead is open a new Pandora's box, one which invites all secessionist movements in Europe to demand a comparable treatment. And, sure enough, just moments later, Spain's PM Rajoy immediately said that he opposes any negotiation by Scotland with the EU adding that "If the UK leaves, Scotland leaves."

Global Stock Surge Continues As "Investors Look To Central Banks For Support"

Why the ongoing rally? A squeeze, sure, and also month-end fund flows. But the fundamental driver remains one and the same, and we quote Bloomberg: "the relief rally endures as Asian and European stocks rally with crude oil amid speculation policy makers will use stimulus to blunt the impact of the U.K.’s decision to leave the European Union, including a pause in the Federal Reserve’s tightening cycle. Investors are looking to policy makers for support."

WTF Chart Of The Day: When Central Planning Fails

Things have not been going according to plan for Kuroda-san and his policy-making 'Peter-Pan's in Japan. Since The Bank of Japan unleashed NIRP on its 'saving' community - which, according to the textbooks would force money to reach for riskier investments, pumping stocks up, or flush cash into inflationary consumption - stock prices have collapsed and bond prices have exploded... In fact, in six months, bonds are outperforming stocks by a central-bank-credibility-crushing 70%!!!

Kuroda Is Trapped As The BOJ Can't Ease Any Further: Here's Why

While the BOJ is reportedly meeting with the government today, it’s going to be addressing a situation that just got more difficult with a poor menu of policy options. It can purchase more assets and lower interest rates, but it can’t change a world economy that’s running out of inflationary gas.

Forget Hikes - Rate-Cut Odds Soar For September As NIRP "Bets" Hit Record High

Despite a modest bounce today, the collapse in stock prices and bond yields since the 'non-event' "won't affect our market" Brexit vote has sent market-implied rate-hike odds careening lower. In fact, there is now a 0% chance of a rate hike to November and a 23% chance of rate-cut in September with December (post-election) rate-hike odds just 7.7%!!! Fed Credibility is official dead...

This Is What Draghi Said To Spark Speculation Of Another Global Central Bank Bailout

The head of the ECB avoided mentioning the U.K.’s vote to leave the European Union but instead called for greater alignment of policies globally to mitigate the spillover risks from ultra-loose monetary measures.  “We can benefit from alignment of policies,” Draghi said at the ECB Forum in Sintra, Portugal. “What I mean by alignment is a shared diagnosis of the root causes of the challenges that affect us all; and a shared commitment to found our domestic policies on that diagnosis."

Frontrunning: June 28

  • Brexit vote, UK political confusion keep world markets on edge (Reuters)
  • Cameron Heads to Last Supper in Brussels Amid Impasse in London (BBG)
  • Banks Get Reprieve From Brexit Hammering (WSJ)
  • U.S. Stock Futures Rise as Stimulus Hopes Outweigh Brexit Fears (BBG)
  • Brexit adds to existing troubles faced by banks (FT)

Global Stocks Rebound, US Futures Jump On Expectation Of "Coordinated Intervention By Central Banks"

After a historic two-day selloff, which as shown yesterday slammed European banks by the most on record the wildly oversold conditions, coupled with hopes for yet another global, coordinated central bank intervention, coupled with modest hope that David Cameron's trip to Brussels today may resolve some of the Article 50 gridlock, have been sufficient to prompt a modest buying scramble among European stocks in early trading, with the pound and commodities all gaining for the first time since the shock Brexit vote.

The First Casualty Of Brexit: Italy Prepares €40 Billion Bank Bailout

Barely has the market had time to digest last week's Brexit vote by the UK, a vote which may never actually be implemented if the "sturm und drang" campaign unleashed by the EU and the ECB on UK capital markets succeeds in changing the mind of enough "Leavers" to the point that the entire referendum is called off and Boris Johnson never triggers the Article 50 clause, and already Europe's most financially troubled nation, Italy, is using Brexit as a pretext to unleash a €40 billion ($44 billion) bailout of its insolvent banks.