Stocks Slump (Again) As FX Carry Disconnects

Tyler Durden's picture

Despite Yellen, Bullard, and Evans on the tape, markets limped lower on the day. Of course, we had the standard POMO-based ramp but once again credit markets and VIX indicated more than a few were seeking protection rather than loading the boat at these all-time high round-numbers. Stocks had reached their 'richest' in 3 months relative to the Fed's balance sheet and so were perhaps due a little more turmoiling but Treasuries sold off all day (and not on growth expectations) to end unchanged across the curve on the week. The USD oscillated but ended lower (JPY unch on the week) and commodities dribbled higher (though all remain red on the week). Perhaps the most worrisome thing today was the total disconnect between stocks and FX carry after Europe closed...


FX Carry tried its best but stocks entirely disconncted after Europe closed (and POMO ended)...


Treasury yields bled higher all day - retracing yesterday's gains...


Credit remains notably saturated still...


Precious metals went nowhere, oil rose modestly...


VIX appears modestly bid here relative to the exuberance...


Homebuilders have slipped notably in the last coupel of days...


Charts: Bloomberg

Bonus Chart: The Volatility term structure reached a complacency extreme - just as it has a few trimes this year - suggesting more than a 1-2% decline on this dip...

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Kirk2NCC1701's picture

Whaddya mean "slump"?  Our year-end bonuses are coming up!

[Wall St execs]

El Oregonian's picture

This time lets go for the Red Pill... What da ya say?

halfawake's picture

2200 here we come. that's all i gotta say.

Yen Cross's picture

   The U.S.T. has officially gone full " Banana Republic"...

  Treasury Forced to Issue $1T in New Debt in First 6 Weeks of FY14 | CNS News

  Got get all that slush money in before the debt ceiling fires up again.

polo007's picture

WASHINGTON (MarketWatch) -- A "strong majority" on the Federal Reserve's policy-setting committee believes that the central bank's unprecedented asset purchase programs have been effective, said Janet Yellen, President Barack Obama's nominee to be the first chairwoman of the central bank. In response to a written question from Sen. David Vitter, a Louisiana Republican, Yellen said the benefits of asset purchases continue to outweigh the costs. The letters were released on Tuesday. Yellen repeated the Fed's statement that asset purchases are "not on a preset course" and the decision on whether to reduce the pace of the purchases will remain contingent on the economic outlook and the Fed's assessment of the costs and benefits. In a separate letter to Sen. Elizabeth Warren, a Democrat from Massachusetts, Yellen said that Fed policy would likely remain very easy for a long time after the unemployment rate falls below the central bank's 6.5% interest rate hike threshold.

djrichard's picture

"Stocks had reached their 'richest' in 3 months relative to the Fed's balance sheet"

Yes, the metric that binds them all.

Al Huxley's picture

Slump, yeah - 'My GOD, at this rate we'll be back at S&P 1785 soon!'

Haager's picture

Algos are programmed to have a slumpfest today/tomorrow. How do they dare to spoil that one with some extra-billions of now lost money while the market can easily absorb the tenfold of it within seconds...

medium giraffe's picture

Whimsical Meekat Newz:


Make believe Bulls bet on make believe Pairs,

Whilst make believe Bears sold their make believe Warez.

HUGE_Gamma's picture