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Treasury Yields Tumble To 11-Month Lows; Stocks Hold Near Record Highs

Tyler Durden's picture




 

It was not a Tuesday, and it was not a Fed day - so stocks closed red. Volume was dismal. The Russell 2000 tested its 200DMA once again (and bounced) but was unable to sustain that strength. Once again the biggest news was the continued collapse in Treasury yields as a combination of massive spec positioning short "because rates have to go up" and the ugly reality of macro weakness combined to send rates to 2014 lows (and 11-month lows for 30Y yields). This is the biggest year-to-date drop in 30Y yields since 2000. The Dow's weakness meant it lost its gains for 2014. Despite ongoing USD weakness (driven by GBP and EUR strength), commodities traded lower with silver worst today (red for 2014), copper weak, and gold and oil flat to modestly lower. VIX was pummeled down to almost 13 midday (which makes perfect sense ahead of NFP - why would anyone hedge that?) but leaked higher as bond market reality set in during the afternoon. The ubiquitous very-late-day VIX slam pulled stocks higher in a buying panic but failed to get the S&P, Dow, or Russell green on the day.

 

 

Before we start on the day's action... take a moment to call the world's largest capital market "wrong"...

 

And a close up this week...

 

Stocks and AUDJPY were largely in sync today...

 

And VIX was pressured and then slammed into the close to ramp stocks to unch...

 

Look at the lower pane for a sense of participation in this rally... lower lower lower volume as we creep higher...

 

Stocks were mixed on the day... with Russell 2000 testing its 200dma and bouncing with a late-day buying panic...

 

High-Yield bond yields did not agree with stocks late day ramp...

 

But Treasuries weren't - all lower yields all day long...

 

And here's some context for the 30Y Yield...

 

Commodities all slid lower on the day - with Silver's big dump early being retraced...

 

Just look at this idiocy in Silver futures today...

 

 

Charts: Bloomberg

 

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Thu, 05/01/2014 - 16:10 | 4717473 LawsofPhysics
LawsofPhysics's picture

This is why we come here.  Pointing out such things, plenty of spreads to play as these types of diversions never last.  Suggestions?

Thu, 05/01/2014 - 16:30 | 4717553 SAT 800
SAT 800's picture

"Marketwatch" has a sorry we have technical difficulties page up; with the whole text page full of the shittiest possible news; problems truouble, losses, misses, lawsuits, nothing but grief and strife. Made me laugh, actually.

Thu, 05/01/2014 - 16:14 | 4717483 gjp
gjp's picture

Nothing volume on FOMC day yesterday, even less today with much of the rest of the world on holiday.

Left to their own devices, American traders and manipulators will just keep pushing higher.  But the big volume bides its time until some foreign elites (hello Putin, how's that inflation and pollution feeling China?) say no mas, and the US is left with nothing but Benny Bux and social networking to sell the world.

Thu, 05/01/2014 - 16:14 | 4717485 Boston
Boston's picture

Tomorrow morning, if non-farm payrolls disappoints, then expect those Treasury yields to move even lower.

That, or judging by the moves over the last 2 days, does the Treasury market know something (about tomorrow's jobs report) that the equity market does not?

Thu, 05/01/2014 - 16:18 | 4717502 fonzannoon
fonzannoon's picture

if we believe that these reports are all basically faked to fit a narrative....which narrative would you go with?

1)Yellen said there was growth but hahaha f u bitch there is no growth

2) Yellen said there was growth and against all odds she was right and now we celebrate

Thu, 05/01/2014 - 16:30 | 4717552 Boston
Boston's picture

I'm betting that true/robust growth isn't happening.

So if they "allow" tomorrow's jobs report to reflect this, and it disappoints, then my core Treasury holdings rise in price.

But if the "don't allow" tomorrow's jobs report to reflect this, and it beats, then I buy a lot more Treasuries on the probable drop in price.....on the expectation that they can't fake the narrative forever., and that the ugly truth will manifest itself sooner or later. And until the price goes back up, I'm earning some carry.

Fri, 05/02/2014 - 05:21 | 4719071 saveandsound
saveandsound's picture

@Boston: be careful with bonds on the long run though... just saying.

Thu, 05/01/2014 - 16:34 | 4717565 NotApplicable
NotApplicable's picture

I'm expecting some bizarre combination of the two.

Gotta keep the non-club front-runners at bay, ya know.

Thu, 05/01/2014 - 18:02 | 4717854 new game
new game's picture

even if data from monthly job beats and treasury yields jump, the trend appears to be bonds are forcasting something the equity markets are not.  or i got it wrong then 100 economista got it right. u pick...

Thu, 05/01/2014 - 16:26 | 4717539 seek
seek's picture

I suspect Yellen knows something the equity markets don't know as well, hence emergency meeting.

Thu, 05/01/2014 - 16:13 | 4717486 maskone909
maskone909's picture

30 year/SPX divergence bigtime. 

just wondering why so many naked shorts on silver rather gold.

wouldnt be more effective to hammer the gold market? 

Thu, 05/01/2014 - 16:18 | 4717500 LawsofPhysics
LawsofPhysics's picture

Still using fun-der-mentals?  I think I see your problem.

Thu, 05/01/2014 - 16:23 | 4717527 maskone909
maskone909's picture

yeah just makes me wonder if this is telling us that the silver market is more threatening to the derivatives markets than we previously thought. hence the recent asemmetric smackdowns.

Thu, 05/01/2014 - 16:28 | 4717545 seek
seek's picture

Yes, I suspect the silver moves have zero to do with the normal manipulations and more to do with someone vulnerable being exposed to risks that needed protection.

Thu, 05/01/2014 - 16:41 | 4717593 SAT 800
SAT 800's picture

Doesn't compute; already back above $19/oz. Just a normal stop-running manipulation in the morning so the floor traders can buy the bottom.

Thu, 05/01/2014 - 18:05 | 4717861 new game
new game's picture

hey don't forget about all the gold and silver "under water"...

Thu, 05/01/2014 - 16:39 | 4717583 NotApplicable
NotApplicable's picture

All the gold ever mined is still sitting around, somewhere. Silver? It's being consumed as we speak.

Then, add the fact that silver mining is mostly a by-product of other (currently non-profitable) ore mining, and you'll see a huge gap between supply and demand.

Thu, 05/01/2014 - 16:25 | 4717536 Save_America1st
Save_America1st's picture

maybe cuz JP Morgue has cornered the gold paper market and are seriously net-long? 

Ask Turd...he's been documenting this pretty closely for a while now.  Watch what the Morgue does.

http://www.tfmetalsreport.com/blog/5606/time-re-visit-recent-thought-experiment

Thu, 05/01/2014 - 16:33 | 4717561 SAT 800
SAT 800's picture

The 30 yer. diverged from everything; including reality as far as I can tell. No idea what's up with that. Silver is a tiny market; easy to fuck with; don't know really.

Thu, 05/01/2014 - 16:34 | 4717564 rainingFrogs
rainingFrogs's picture

10 year UST at 2.613, yield slip slip slidding over the last week. The dropping yield defies any sense of logic. But then, who would believe Italy could issue 10-year bonds at 3%.  Belgium clearly has deep pockets.

Gold is getting slammed (down 11 to 1285 currrent).  What will happen when the Ukraine gold burns up?

As much as we discuss manipulated markets, its hard to not admire the ability of the Fed to strong hand the markets like this.  Wow!  It makes no sense.  Go long.

The biggest question in my mind is how long this can go on. Bad news for all he doom-sayers.   Can't defy the Fed.

Thu, 05/01/2014 - 16:42 | 4717601 NotApplicable
NotApplicable's picture

It will go on until you refuse to accept fed notes in exchange for goods and services.

Guaranteed.

TINA told me so.

Thu, 05/01/2014 - 16:36 | 4717575 TheRideNeverEnds
TheRideNeverEnds's picture

Record low volume is bullish.  

Thu, 05/01/2014 - 18:12 | 4717885 Spungo
Spungo's picture

Tina = slang for crystal meth?

Thu, 05/01/2014 - 19:50 | 4718201 Pareto
Pareto's picture

silver can go to 5 on paper, it will still cost me $20 to buy it. so......................whatever.

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