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Bonds' Best Day In 8 Months As Stocks Close At Record Highs

Tyler Durden's picture





 

Treasury curve flattening continues to gather pace as 30Y bonds rallied their most in 8 months today (even as the shorter-end sold off modestly) but on the week the flattening is dramatic to say the least. Of course, all eyes were on stocks as the Dow and S&P leaked (post European close) to new highs (and the Russell gained back yesterday's losses and some to close the week's winner +3.5%). Gold (and silver) rallied on the day back over $1200 (but closes -3% on the week). VIX followed a similar pattern to yesterday with an early drop followed by a drift higher as it's clear managers are protecting into year-end. Quad witching and rebalancing provided some fireworks into the close as volume rose and stocks slid (as Nanex noted - something broke - lots of micro-crashes/rallies) as CBOE quotes stopped with 10 minutes to go.

 

The S&P dropped notably in the last few minutes - back to VWAP..

 

The late-day chaos perhaps summed up best by Nanex...

In close up...

 

The long bond surged lower in yields today...

 

and on the week the flattening is very clear...

 

Gold rallied on the day but closed -3% on the week...

 

Stocks were well coupled with JPY crosses until the European close and then decoupled... with the closing dump seemingly attempting to recouple...

 

After yesterday's disappointing performance, the Russell 2000 surged back to take the victory on the week... (even as the Dow and S&P rolled over)...

 

But VIX tracked a similar trajectory today with protection bid all afternoon...

 

Charts: Bloomberg

 


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Fri, 12/20/2013 - 17:08 | Link to Comment FieldingMellish
FieldingMellish's picture

PMs hanging on a precipice ready for a Sunday night smackdown. 

Fri, 12/20/2013 - 17:15 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Optimist.

Fri, 12/20/2013 - 17:20 | Link to Comment SamAdams
SamAdams's picture

Ben Swann celebrates the FED's centennial:

http://benswann.com/truth-in-media-100-years-of-the-federal-reserve/

Dollar has lost 98% of its value in 100 years.  This ponzi is at the end....

Sat, 12/21/2013 - 14:33 | Link to Comment webspin
webspin's picture

Hmmm.... Is the country as a whole 98% less valuable than it was in 1913?

 

Assets arn't defined as absolutes of value. If you don't understand why something that has absolutly no physical exhistance like a bitcoin yet can still be of value, you don't understand the very foundation of speculation and ALL marketplace values are speculation and relation.

Fri, 12/20/2013 - 17:18 | Link to Comment Al Huxley
Al Huxley's picture

What kind of Scrooge would smack down a market 3 days before Christmas?  Anyway, real solid rally today - look, its back over 1200!  And the miners put in a fine showing - GDX is up .03 on the day, that's a solid .15% gain - looks like they're finding a bottom here and getting ready to roll in the new year LOL.

Fri, 12/20/2013 - 17:40 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

The Fed's probably having their Christmas and 100 year birthday party.  Lots of booze flowing, lots of buttons being pushed.  The Bernanke is up there singing karaoke "Oops, I did it again...."

Fri, 12/20/2013 - 17:48 | Link to Comment e-man
e-man's picture

What party?  That's a normal day at the Fed.

Fri, 12/20/2013 - 18:00 | Link to Comment adr
adr's picture

Umm, nobody at the Fed celebrates Christmas. Hanukkah was over weeks ago.

Fri, 12/20/2013 - 19:29 | Link to Comment disabledvet
disabledvet's picture

same people who wouldn't let the market go down after the big money left for the Hamptons this summer. "market soars on news of yield curve getting flattened the most in a decade"? REALLY? forget not being in know...somebody is going to look like a total idiot here shortly. that market is either saying recession is imminent or some major league default is right around the corner. and the Fed is going to throw QE into the dustbin of history on this news? "balls indeed." http://www.youtube.com/watch?v=TwJExYWhRSU Rob Reiner directed a lot of movies but this was by far his best.

Fri, 12/20/2013 - 22:45 | Link to Comment sixsigma cygnus...
sixsigma cygnusatratus's picture

+11 for the Spinal Tap reference.

Fri, 12/20/2013 - 18:07 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Why are you trolling gold day after day when you said you were finished with it after 12 years?

Tyler, how come you don't turf trollish cocksuckers like this clown?

Fri, 12/20/2013 - 18:25 | Link to Comment Al Huxley
Al Huxley's picture

Relentlessly catching falling knives will do that eventually.  In any case, my sarcastic comment above aside, the setup for a Sunday night beatdown appears as good now as every other Sunday, especially those Sundays before Comex month-end dates.

Fri, 12/20/2013 - 19:05 | Link to Comment Bay of Pigs
Bay of Pigs's picture

I hear you, but how is stacking metal (not paper), at lower prices catching "falling knives"? Some call it "cost averaging in", "prudent buying" and "increasing a position".

In the face of massive Chinese demand, record US exports, empty London vaults, and Swiss refining going 24/7, I really don't understand the Full Retard Western view on gold.

The weak hands, like this quitter above (FM) is a great example of the brainwashed masses in the West. Shortsighted and stupid.

Fri, 12/20/2013 - 19:28 | Link to Comment Al Huxley
Al Huxley's picture

I agree with you - buying the metal into this idiocy (provided its with 'savings' money so you don't get forced to sell) is not in any way catching a falling knife.  I think there are quite a few people though (myself included) who got caught offside by the amount of destruction in the mining sector, and that is DEFINITELY knife-catching territory.

Fri, 12/20/2013 - 21:38 | Link to Comment Godisanhftbot
Godisanhftbot's picture

 cmon man, fess up .you been snookered, had, scammed, took.

 

 gold just a bitcoin with heft. (c) 2013

Fri, 12/20/2013 - 21:39 | Link to Comment Godisanhftbot
Godisanhftbot's picture

 cmon man, fess up .you been snookered, had, scammed, took.

 

 gold just a bitcoin with heft. (c) 2013

Fri, 12/20/2013 - 17:10 | Link to Comment new game
new game's picture

we shall see on the pm front.

i am loong, i am faithfull. i am loyal.

but

have 

no 

worry

where 

the  price 

is 

for 

now...

see ya next summer at 1000

or 1500.

happy

new 

year...

Fri, 12/20/2013 - 17:29 | Link to Comment Herman_the_German
Herman_the_German's picture

 

#piccshare_pic_options, #piccshare_pic_options > *, #piccshare_tint, #piccshare_logo { border-radius: 0; -moz-border-radius: 0; border: none; margin: 0; padding: 0; }

No Hindenburg Omen today ?

  

Fri, 12/20/2013 - 17:45 | Link to Comment Al Huxley
Al Huxley's picture

The name needs to be changed - something that sounds less ominous and more indicative of record new highs with no risk, straight ahead.  Maybe the 'fluffy kittens and puppies omen', I don't know.  And maybe the criteria needs to be less restrictive as well - along the lines of 'a fluffy kittens and puppies omen is generated when the following conditions are met: 1) The market is open'.

Fri, 12/20/2013 - 17:48 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

Anybody have a hypothesis on why the long bond is rallying?

Fri, 12/20/2013 - 18:01 | Link to Comment ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Maybe the Fed is only saying they are tapering?  Looks like when they were printing $85B per month they were really printing $96B per month

 

http://www.aei.org/article/economics/monetary-policy/federal-reserve/a-s...

 

 

Fri, 12/20/2013 - 21:09 | Link to Comment razorthin
razorthin's picture

Alright, no more quiet acquiescence - since I have Italian blood, and since it is boiling - I want to see Bernanke, Paulson, Geithner, and Yellen hung upside down by their toenails in the Piazza, ripe for stoning.

Fri, 12/20/2013 - 18:05 | Link to Comment adr
adr's picture

I've given up on finding rational reasons for anything in this market. The answer is always because some billionaire wanted it to move that way.

Why is gasoline over $3 for the first time ever on Christmas?

Because some billionaire wanted it to be.

Fri, 12/20/2013 - 18:22 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Actually, it's because WTI is on track to set a new end of year closing high.  If it closes over 98.xx that will do it.

So much for abundance.

Fri, 12/20/2013 - 18:21 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

If you want to get out of stocks for 2014, bonds are the traditional place to go.

Not to mention that Q4's GDP is going to be smashed by the pull forward demand that goosed the Q3 number pre shutdown in Oct.

Fri, 12/20/2013 - 18:30 | Link to Comment magne13
magne13's picture

Yes very simple, Curve flattening, chasing long end hitting front end, curve gets whacked and has overshot. yields will follow the 30yr lower however over the next few weeks.  REmember the Taperlite was just to get a taste of balance sheet restriction due to deficit decrease and FEDs ability to manage 4trn portfolio without disrupting bond function.  yields will be moving lower not higher, do you honestly think anyone can afford higher rates, do you think the FED wants higher rates, of course not...

Fri, 12/20/2013 - 18:56 | Link to Comment starman
starman's picture

Form the looks of it I can see S&P 24000 and the DOW 98000 ,
No seriously why the fuck not who's gonna stop it?

Fri, 12/20/2013 - 19:09 | Link to Comment RabbitChow
RabbitChow's picture

30 yr rate is no concern to me.

Now, the 10 yr rate is what to watch.

When it goes above 3%, look out.

It's gittin close, too.

Fri, 12/20/2013 - 20:00 | Link to Comment BringOnTheAsteroid
BringOnTheAsteroid's picture

Ok, I'm gunna be brutal. For once and for fucking all can you stupid cunts obsessed by the price of gold get obsessed instead with the number of ounces you have in your possession. The only chart that really matters now shows the number of physical ounces you hold against time. This chart is going from bottom left to top right. THAT IS ALL THAT MATTERS. All the perceived wealth occurring in the indexes is going away, most likely nearly all of it. Every second you have an open long position in these markets is a second you risk losing everything, and for fucking what, so you can amass more fiat, more digits in a banks computer. You dumb cunts obsessed by the price of gold are too far gone to realise what it is you are obsessed about, paper money. What a beautiful fraud it is to have people expend their labour in exchange for little pieces of paper. What a giant fucking fraud. So many people on this forum are suckered so far into the scam they cannot see the forest for the trees. I don"t care what it is you exchange your fiat for but if it isn't something physical, tangible, touchable, holdable then you are fucked.

Again, I'll accept an ounce of silver from you in return your for securing your financial survival.

To all non physical asset holders (including those with the majority of their wealth in stocks or currencies or bonds or treasuries), you are fucked, eventually completely fucked.

Fri, 12/20/2013 - 20:54 | Link to Comment razorthin
razorthin's picture

Me thinks someone is about the taper...Just like they lied about the $85B/mo that was really $110B.

Sat, 12/21/2013 - 05:42 | Link to Comment Dre4dwolf
Dre4dwolf's picture

Taper = We no longer need to inject money, we are lazy so, with negative interest rates, the banksters can write and cash their own checks.

 

Taper may end, but "QE" is just beginning, wait till yellen gets in der and starts handing out blank check books haha

 

Sun, 12/22/2013 - 15:05 | Link to Comment dudeman
dudeman's picture

QE doesn't make long-end rates go down! I don't know why everyone (including the retards running the Fed) don't understand this. Traders are clearly discounting the inflationary impact of QE. The Fed is creating short term debt to buy long-term debt. So in theory, it should put upward pressure on the short end of the curve and downward pressure on the long end. However, the yield curve steepens after QE.

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