Market Plunges As European Crisis Is Back

Tyler Durden's picture

JPY saw a massive correction today - gaining 3% against the USD - its biggest single-day gain since May 2010 - dragging all the carry traders with it. S&P 500 futures volume exploded to its highest since the rally began in November as it broke its uptrend and slumped 40 points from its intraday highs. VIX's term structure collapsed to its flattest in 18 months as spot surged above 19% (no - everyone wasn't hedged). The Dow, S&P, and Nasdaq are all red for the month and even the Trannies are almost unch. Treasuries soared with 10Y ending -10bps (after being +4bps at its worst of the day). Gold and Silver surged (with the latter testing near $1600 again) as WTI dropped 1%. Homebuilders (not helped by lumber's price collapse) dropped 3.5% but every sector was ugly today and closed at its lows.

S&P futures lost their gains for Feb, broke their uptrend dramatically on heavy volume and large trade size, and are heading towards QE3 levels...

S&P 500 futures crashed 40 points from intraday highs

 

The month of Feb just went red...

 

VIX term structure collapsed and VIX rose to its highs of the year...

Stocks finally caught down to Bonds' 'implied' weakness into the closing minutes as Gold held up near its highs of the day...

FX markets were a mess... EUR dumped over 1%...

 

as JPY exploded around 3% higher on the day - implying a serious session for Japan overnight...

 

Gold and Silver gained almost 1% on the day - even as the USD rose - but WTI dropped back towards $92...

 

Cross asset class correlation surged as the slide accelerated late on and stocks caught down to Capital Context's CONTEXT model...

And finally, the exuberance of the equity market is catching back down to the less sanguine credit market just as we suggested...

Bonus Chart: While we have been told to expect a 13,000 Nikkei 225 level by the end of March - and we are sure Abe and his pals are watching FX markets closely - today's 3% crash higher in the JPY against the USD will have a few hearts racing as Japan opens this evening. Based on the last few weeks of highly correlated action between the Nikkei and the JPY, the current levels would tend to imply a drop of over 600 points on the main Japanese equity index or around 6%. Cue, BoJ nomination withdrawals in 3...2...1...

Japan closed happily higher last night, safe in the knowledge that all is well and fixed in Europe...

 

How things change...

 

Charts: Bloomberg

So to summarize, this is what just happened courtesy of Brokers with Hands On Their Faces