The Russell Is Red, The Dow Is Green, And The Steepening In Bonds Just Has To Be Seen

Tyler Durden's picture

Every day this week saw early weakness (the dump) succumb to a rampathon (pump) but as those dump-and-pumps progressed the gap between small-cap/high-beta and large-cap/blue-chip widened and widened. The Russell (and the S&P) had its worst week in a month but the Dow (and just Trannies) managed to close the week green and new record highs. Homebuilders were the worst sector on the week (-2.5%) and Staples best with a modest gain. Away from stocks, the USD surged 0.55% on the week (its biggest jump in 7 weeks) led by EUR weakness (250 pips on Draghi promise). The biggest news was in bond-land where the 30Y yields exploded post-Yellen (+10bps on the week) and the short-end rallied (-4bps) for the biggest steepening in 20 months. Gold closed the week at its lowest in 3 months. Much was made of the shift lower in VIX today (back under 13) - especially ahead of the Donetsk referendum - but given the market's relative underperformance it would appear hedges were lifted and positions derisked simultaneously.

 

Courtesy of the JPY (and VIX see below)...

 

 

 

The Dow closed at all time record high close - and made it perfectly unchanged on the year...

 

The week in stocks - dominated by dump-and-pumps and high- versus low-beta

 

As growth and value are stuck at six-month lows relative to one another...

 

This was not a short-squeeze... in fact this was the worst week for "most shorted" stocks in 2 years... (and they are now down almost 13% from their highs)...

 

VIX did not do the job it was supposed to do - as it seems 'real' sellers dominated the pumpers for change as they unwound hedges and underlying risks...

 

Which leaves the VIX term structure near its steepest in months...i.e. most complacent!!

 

The USD had its best week in the last 7 as EUR dumped 250 pips on Draghi's promise of next time...

 

But bonds were the most active...

 

with 5s30s steepening the most in 20 months...

 

Gold closed at its lowest weekly close in 3 months...

 

Charts: Bloomberg

Bonus Chart: The Flow is not your friend...

 

Bonus Bonus Chart: Either we re-pump this credit bubble or stocks are gonna blow...

 

Summing it All Up...