Yield Curve

Yen Tumbles After BOJ Boosts Bond Buying

Moments ago, the BOJ decided to avoid any "doubts about its stance" and when it announced the quantities for today's POMO operations, it did not disappoint because whereas it previously bought "only" 410bn yen in the 5-10 year zone, today it increased the amount by 10%, to 450bn, effectively increasing the amount of debt the central bank is monetizing on the long end of the belly.

What If Hillary Had Won?

Fixed income markets are essentially in a new world; US stocks, by comparison, are in only a slightly better position. The “Trump rally” has only been worth 4-5% when compared to our “What if” Clinton scenario. Realistically, it should either be more (if bond markets are right about a breakout in inflation/corporate pricing power) or less (with higher rates pressuring equity valuations in the absence of greater earnings power).

You're Buying, They're Selling: Big Bank Execs Dump $100 Million In Stock As Market Soared

Shortly after the melt-up in US bank stocks began following Trump's election victory, we noted heavy insider-selling (and options expiration) among Goldman Sachs executives. Well the selling never stopped, as WSJ reports executives at the biggest Wall Street banks have sold nearly $100 million worth of stock since the presidential election, more than in that same period in any year over the past decade.

"Pulling Awesome Forward"

The euphoria in markets is based on a seismic change in policy. The questions are on timing, efficacy, and whether the Fed tightening cycle overcomes any benefits. And, the environment today is much different than the 1980s, and just ten years ago. The market is pricing in a lot of “Everything is Awesome”, but has all that awesome, real or fantasy, been pulled forward? We will see.

The Man Who Called The Last Bond Bear Market 40 Years Ago Says "Buy Bonds"

74-year-old bond guru Lacy Hunt is among a rare breed in finance today: people who actually traded during a period when bonds continuously lost value. Today, as hints of inflation start to bubble and calling the next bear market becomes the industry’s favorite pastime, Hunt says no, "I’m still long bonds, especially the long-end."

Ignore At Your Peril

They’re at it again. It isn’t enough that the Federal Reserve’s tighter monetary policies are hamstringing global economic growth, but over the past week a few different Fed officials floated the idea of reducing the size of the Fed’s balance sheet. They seem intent on tightening until something breaks.

The "Most Bearish Hedge Fund" Capitulates: "We Are Beginning To Close Parts Of Our Short Book"

"Shorting has been hard this year ... So despite what I think, we are beginning to close parts of our short book. We have largely exited airline related shorts. We have also closed staple shorts, as they were largely there to protect against a fall in yields, which they did to a degree. We have also closed many developed financial shorts to make some space for Chinese financial shorts."

BofA Warns Of 'Icarus' Trade: "A Wobble Then A Melt-Up... Followed By A Melt-Down"

"After a Jan/Feb wobble, we believe stocks & commodities will have one last 10% meltup in H1," explains BofA's Michael Hartnett in his latest note, but, he adds, by the end of 2017 we will see a "meltdown." BofA awaits the endgame of the so-called "Icarus Trade" amid unambiguous signs of bullish investor Positioning, bullish Profit expectations & hawkish Policy from Fed/ECB, as well as outperformance from laggard risk assets; before calling for the Big Short.