E-Bay Market Sends Stocks To VWAP As Bond Yields Spike To 8 Month Highs

Tyler Durden's picture

The short-squeeze rip extended through the middle of the day today but on considerably lower volume as we tested up to QE3 highs and sucked in just a few more traders. It seems retail sales (and outlooks) disappointing, higher taxes for 77% of us, debt ceiling and spending cuts to come, and earnings outlooks being slashed en masse was not enough to break the market's spirit... But, when the FOMC minutes hinted at the punchbowl being removed (even modestly), the bid disappeared and S&P 500 futures dropped 10 points and Treasury yields spiked (with 10Y pushing to 8 month highs). USD strength (+1% on the week) and commodity weakness (though gold and silver remain marginally higher on the week) weighed on risk assets in general but algos went quiet and ES depth-of-market plunged as correlations broke. The usual e-bay style close saw ES ramp off the lows of the day to test VWAP and end the day-session there (-4pts or so close to close) as VIX was held lower (sub-15% at 2-month lows). We said yesterday this feels fragile and sure enough today showed its brittleness - as AAPL clung to yesterday's lows staring into the gap. Now the bulls await NFP hoping for a bad print, we assume?


Bonds snapped higher in yield as the rest of risk assets turned highly correlated and risk-off...


Credit (HY spreads) seemed to break first... (maybe on Gundlach's credit risk bubble comments)


S&P 500 futures ramped to VWAP into the close of the day-session and are fading a little after-hours...


but VIX was held down as we dropped...


And the QE4EVA divide narrows modestly...


with 10Y yields pushing to May 2011 highs - 30Y up 25bps this week...


Commodities rolled over but remain up for the week...


as the USD rose by around 1% with EUR weakness post-repatriation in full force...


Much of the move today was risk-assets and equities recoupling from late-yesterday's ramp close. The chart below was more or less in line at around 230pmET yesterday, then ES (red) ramped into the close and CONTEXT (risk asset proxy) did not follow... today's close saw ES fade and Treasury weakness lead CONTEXT higher...


And note that 1) the move in TSYs is nothing compared to the selloff into QE3 (this is not the 'great' rotation; and 2) the FOMC's concern at ending QE is not driven their optimism on unemployment or the economy (see their forecasts) - its driven by their fear of the size and impact they are having on the market itself.


Charts: Bloomberg and Capital Context

Bonus Chart: AAPL clinging to yesterday's lows - and the gap below...

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HedgeAccordingly's picture

today was a joke.... but it is all good. housing is recovering lol - http://hedge.ly/VjKUS5

otto skorzeny's picture

I wish that this myth of people needing good-paying jobs to buy houses would stop. gold didn't do too hot today and NG is getting beat back down,

Stoploss's picture

Thank god there is no stock market myth busters.

Would have torn this som bitch to shreds years ago.

Freddie's picture

Hey Tyler(s) - did anyone put in a last second fake overvalued trade on Apple today to "paint the tape?"

The stock market is full retard for retards who watch TV and Hollywoods propaganda.

Thank God the bond market is 'real."  (sic)


fonzannoon's picture

If Obama really wanted to destroy the place he would tell Ben to stop QE and get us a nice bond spike. That is the best way to cut spending. Romney said in his 47% speech that there would be a failed bond auction. I think O has the balls to do it.

NotApplicable's picture

And Pinnochio wanted to be a real boy, too!

fonzannoon's picture

hyoerinflation is taking too long and gold bugs might make out okay. time to jump start this crisis. an interest rate spike should get things moving

FL_Conservative's picture

Fed maintains QE programs = eventual currency collapse

Fed stops QE programs = near-term debt collapse, which brings on a currency collapse

Therefore, the Fed will not stop monetizing as it will cause the collapse sooner.....and all involved are best at kicking the can anyways.

fonzannoon's picture

I thought we all agreed O wants a collapse?

FL_Conservative's picture

O wants anything that allows him to be the dictator "his father" dreamt he could be.

Darth Rayne's picture

O wants bigger government, bigger armies and you to love him for his obama care.


People who believe in central control KNOW it would work if they had enough power. I know they are wrong. They know I am wrong.

I don't feel the need for a drone army or think that 47 million on food stamps is big or clever. Where did it all go so very very wrong? (1913)

chump666's picture

The Fed may be concerned that TIPS went bid as USTs were sold off on the last meltup, USD is bid also with oil.  It's all down to the oil price which is a inflation pr-curser to all out stagflation.  The Fed is losing control to issue that statement.

In fact congress will go into a panic pre debt ceiling hike...

A total mess.

dexter bland's picture

Time to be loading up on TBT, get out of PMS, equities give them another coupla weeks...

Quinvarius's picture

You don't want to sell PMs here.

chump666's picture

Maybe, there was short squeeze last session.  I wanna see where that dirty, filthy money flows into.  We could be redux last downgrade in 2011, which would mean all into USTs and USD. Indust commodities will get smacked to hell.

buzzsaw99's picture

so much for that cash on the sidelines theory. it looks like the money to goose stocks higher came from bonds and commodities.

fonzannoon's picture

That could be the plan. Or maybe O calls the debt ceiling bluff? we thought he wanted to go over the cliff...maybe he was looking for the big fish. hit the debt ceiling and have a full blown panic. blame the repubs and start shooting executive orders left and right. huge power grab.

buzzsaw99's picture

I think the fiscal cliff drama has done more damage to the stock market below the water line than is evident from top side. Retirees who were uncertain about the 2013 tax picture certainly withdrew more from their accounts in dec. 2012 than they would have otherwise. The irony is that if the market looks like it will tumble in spite of all their efforts the fed will have to fake-tighten to keep their ominipotence mystique alive.

kaiserhoff's picture

Like a cat on a hot tin roof.  Yehaa! 

dexter bland's picture

The real damage is to the bond market. No fiscal discipline, chaos in Washington, not a good look for foreign holders of US debt. With negative real yields, declining liquidity thanks to Fed why would anyone want to hold this stuff? Watch TBT.

Al Huxley's picture

...and behind closed doors at the FED - 'fuck, those minutes were just supposed to tank gold, not the fucking bond market!  Now what the fuck are we supposed to do?!'  Serves them right, self-serving rats.

Freddie's picture

These people are worse than rats.  

Meanwhile - Firearms sales up 19% for 2012 versus 2011.  Sales in December up 39%.  19.6 million gun sales checks in 2012.  It's a good thing those Americans have guns and know how to use them.  

Americans also seem to be a bit pissed off.

Boilermaker's picture

RUT back to climbing in AH.


Irelevant's picture

The NFP? .gov documents that tell you something about a statistic that Government makes. Yup, I`ll believe that! I always trust the Government.

Stoploss's picture

We need Zerohedge TV!


Freddie's picture

Get those T-shirt banner ad girls in panties, tight t-shirts and sunglasses doing Zero Hedge (web) TV.

I don't watch TV or Hollywood's shit. I stopped years ago.  It is all Obama 24x7 Praise TV and Honey Boo Boo.  TV and hollywood are for full retards.

kaiserhoff's picture

Don't forget Bonzai.  Poon hounds unite;)

Freddie's picture


We will get Tyler's ZH TV to upgrade some of those T-shirt girls too.  The Meh girl kind of has a bit of an adam's apple.  The blond in the red t-shirt is not too good either.

Motorhead's picture

Charts, bitchez!

Sutton's picture

To sell $1 dollar of inventory is to sell 3Trillion dollars of inventory

Genius self taught calculus geek phD Bernanke is painted into the corner.  I guess only a helicopter can lift him out.

just-a-girl's picture

My guess would be that rates will rise until a deal is done on the debt limit.  QE4 is on hold until a new debt limit has been established.  Once a new higher limit is legislated, rates will resume their downward trend and Treasury rates will fall as the government issues new debt and the Federal Reserve resumes QE4.

otto skorzeny's picture

On a lighter note-the 100 richest people in the world are $250 billion richer in 2012 than they were in 2011. That makes me feel better as my paycheck reflects an extra $1800 a year coming out in taxes.

polo007's picture

The creation of money

In practice, it works like this: For every $10,000 a bank gives out as loans, $1,000 or $2,000 have to be deposited at the central bank. That means, if a bank collects $100,000 in deposits, it could keep $10,000 for liquid cash, put $90,000 into deposit with the central bank, and it is then allowed to create $900,000 of fresh money just by writing the figures on someone’s accounts!

In the case of the government needing money to spend, the procedure is slightly different, but the result is the same. The government has to issue papers that promise interest and repayment. Those papers are "bought" by the banks, who "sell" them to their wealthy clients, or who may also keep them, and the government gets credited an equivalent sum of money.

The irony here is that the government, who should by rights be the issuing authority of the money that circulates in the country, has to borrow the money from privates (through the bank) and that is has to pay interest for this. Now we start to see why the government never has money, and why much of our taxes go "off the top" of the budget, towards debt service.


Darth Rayne's picture

You are right but we do this better in the UK.

In 2007 UK banks had £1.25 for every £100 on loan.

A UK bank with £100,000 on deposit would, on average, have loaned out £8 million.

That's the beauty of fiat currencies and bank created credit aka 'money'.

How does it end? (hyperinflation.)

When will it end? (To be fair, if we limp through the baby boomers retiring and dying then it won't end.)


If the econonomy lasts 12 more months I am selling my gold for a 20% deposit on a house. I'll pay for it in seven years. Wish me luck.




Quinvarius's picture

Everything says debt downgrade is coming.

Darth Rayne's picture

Won't make any difference. None.

goldenbuddha454's picture

The difference between Democrats and Republicans is apparent; Democrats are gleeful when they kick the can and Republicans are reluctantly gleeful.  Not really a dimes bit of difference between the two really.  Like Ron Paul said, 'we are at the point of no return' which means there is nothing anyone can do but kick the can down the road.  The fed will print and the house will spend.  End of story.