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Volumeless Rally In Stocks; Bonds Still Tapering
The overnight gains from a market's misperception of PBOC comments faded quickly as out of the gate this morning it appeared 'good news was bad' as the market faded fast on heavy volume (after decent volume) but once the first hour flush was done we retested highs and then trod water for most of the rest of the day. S&P 500 tracked AUDJPY almost tick-for-tick all day and got its lift - testing up to unchanged from Friday's close. Equities were aided (in a correlated fashion) by VIX compression (down over 2 vols below 18%) and a very significant compression in credit markets (more below) which provided a stop-run ramp at 330 (surprise) but that faded fast into the close (leaving stocks still with decent gains but on very weak volume). Treasuries saw more longer-dated underperformance (bear steepening with 10Y/30Y +7bps, 5Y +3bps) and FX markets saw the USD rise modestly - both clearly more Taper-on moves. Equities closed weak.
Equities diverged from gold, the USD, and Bonds...
and stocks had only one thing on their mind today...
Treasuries saw the long-end playin catch up (in yield) to the belly's post-FOMC underperformance)...
Credit markets ramped tighter (higher in the chart below) providing some impetus in that late ramp for stocks...
but it seems more driven by a compression trade between the index and its underlying positions (put simply - the S&P 500 equivalent of credit was trading significant cheap relative to its underlying components - which occurs due to technical demand issues that are not as easily arb'd away as they are in HFT-algo driven equities - and so traders sold index protection and bought the underlying indivdual names protection to bring the two more in line)..
In other words, do not get too carried away with the credit rally.
Homebuilders were juiced at the open by the data but did nothing but fade all day (and are still -8.5% from FOMC)... also Utilities did well on the day - even as bond yields pushed higher still...
Charts: Bloomberg
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06-25 15:57: NYSE closing imbalance - USD 1.3bln to the sell-side
Another Hindenburg Omen?
30 years took poop at the close. TLT looking at 106 or lower inside a steep downtrend channel
Sure am glad I bought those 105 puts this morning!
Is there anywhere that displays to us plebs what kind of volume is occurring in the bond "market?" I hear all this talk of selling and tapering, but I've seen nothing substantive other than price movement.
TLT channel completes 2-yr HS.
The economy is great, recovery is in progress, let's all dive in!
The Euro and the GBP getting pounded again; whoopee! No recovery in the Long Bond Contract; it closed red. Some kind of turning point has been reached. Skepticism about the official party line is rearing its ugly head.
Hey look, someone is going to jail
http://www.mortgagenewsdaily.com/06252013_mortgage_fraud.asp
Too bad this is only for the fraud to cover up the real fraud.
Wake me up when MERS is taken down.
Sell any and all rallies.
BTFD is dead.
In honor of the upcoming Russell index rebalancing, here are the finalists for the Henny Youngman/Russell 2000 Absolute-Worst-Joke-of-the-Month award:
“It seems the Russell’s been in a bit of a RUT lately.” (drum roll, cymbal hit)
“Take my IWM … please !” (triple snare tap)
“I got my mother-in-law 5 shares of IWM for her birthday.” (double rim shot). “Wait, there’s more: IWM sagged so low, even her breasts couldn’t find it.” (rude trombone hee-haw, cymbal) “We were a little puzzled by that.” (canned laugh track)
IWM walks into a bar. Bartender says, "hey buddy -- why the short face?"
"I got a million of 'em."
Two market indexes are on a jet to Moscow when one says to the other:
"Hey Russell, what's your business in the old commie block?".
The 2000 lb guy turns around and says: "You should know, you're the SPY!"
+1 for the sound effects.
Only thing missing was Henny's violin.
The algo programmers are fools. Just program the cute little machines to correlate their trades with NZD/ZAR and they'd have a happier time. It's been doing a pretty much straight line upward, it's much easier to manipulate and it makes about as much sense as ramping US equities based on the daily FX cross of choice. The Kiwis may not like having their currency overvalued just so the DOW can climb but the good of the few (Kiwis) is not as important as the good of the fewer (Wall Street elites).
Credit leveled off late last year, and now we are in the midst of the inevitable swoon. I don't see a relief rally here save for haven flows finding their way to treasuries.
http://dareconomics.wordpress.com/2013/06/25/around-the-glove-06-25-2013/
Thats not a rally, thats just noise in the machine.
Or the Ghost in the Machine
10 yr yield still walking higher AH's...damn, should have bought some VIX at the close.
All I see is big money rotating, gyrating, sloshing (or ist is zipping like lightning) in and out of sectors and asset classes.
Rather than money from a prosperous middle class being invested gradually and moved slowly with a long term perspective we have speculators who produce nothing gaming the volatility and mis-allocation of resources and capital thanks to FED liquidity and bailouts.
Real people and pension funds are left to chase yield behind the locomotive and first class cars; sitting in the cramped caboose coughing and wheezing on the smoke and dust from up front.
I doubt any tenderloin medallions in Bearnaise sauce, asparagus, brioche, and champagne are going to make it back to the caboose - so I'll take my two eggs, wheat toast, bacon, and black coffee now please (Gold, Silver, Cash).