Hawkish Fed Sends USD, Bond Yields Soaring; Stocks Dump & Pump

Tyler Durden's picture


The last 2 days have seen the USD index rise at its fastest pace in almost 4 months, closing in on 1-year highs. Led by JPY and EUR weakness, the USD is up over 1% this week (which is set for the best week in 9 months). While stocks shrugged off the hawkish minutes initial kneejerk lower and surged towards new record highs, credit markets were not as exuberant about the great suck out of liquidity (and how they'll manage to roll the wall of debt forthcoming). VIX was slammed back to one-month lows (even as the Fed admitted greater uncertainty) slamming stocks higher. Treasury yields rose notably (with the short-end underperforming) as 2Y-5Y up 5-6bps, 10-30Y up 1-3bps.  Gold and silver drifted modestly lower and oil jerked higher. Copper was up from earlier on China restocking rumors. Into the close, stocks faded quickly - rather disappointingly ruining mainstream media's "new record high" headlines. Janet, save us....

Some context...


Stocks dipped and ripped on FOMC...


Thanks to VIX...


As the USD pushed on higher


to one-year highs...


But credit wasn't buying the fed tightening


and the long-end of the bond curve weakened but bear flattened...


but the whole curve remains higher in yield on the week


Gold and silver slipped modestly, oil surged on FOMC. Copper had a big day after China restocking chatter...


Charts: Bloomberg

Bonus Chart: AAPL Hit Record Highs...

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Wed, 08/20/2014 - 16:09 | 5121733 ekm1
ekm1's picture

You know it's all fake when both USD and all other financial assets go up.


They are inversely related, if real trading actually took place.

Wed, 08/20/2014 - 16:12 | 5121741 fonzannoon
fonzannoon's picture

Well, it's either all fake, or everyone wants all things USD. The beauty is in the eye of the beerholder.

Wed, 08/20/2014 - 16:17 | 5121757 ekm1
ekm1's picture

It's just not possible.

Higher price means less USD in circulation and vice versa for all assets priced in USD.


Wed, 08/20/2014 - 16:19 | 5121767 fonzannoon
fonzannoon's picture

I made money in the market today. I could have sold at the close. I could withdraw that money when it settles. That is real and that is possible. 



Wed, 08/20/2014 - 16:23 | 5121780 ekm1
ekm1's picture

that's good news

Just be careful, because when it drops, it's going to be by 2000 pts per day

Wed, 08/20/2014 - 16:29 | 5121794 Divided States ...
Divided States of America's picture

in that case, the markets will just open for 1 nano-second and close at 9:30 after the circuit breakers get tripped up...day after day after day and the retail sheeps wont be able to gtfo EVER. But we will see, this market looks impregnable.

Wed, 08/20/2014 - 16:35 | 5121814 Tinky
Tinky's picture

Remember, if it walks like a Ponzi scheme and quacks like a Ponzi scheme, it's anything but impregnable.

Wed, 08/20/2014 - 16:59 | 5121931 SamAdams
SamAdams's picture

Chinese told you guys back in Feb 2014, the FED was going to end QE by Nov and the first Rate hike comes Jan, 2015.  Thus far, they have been correct.  They should be, they have a vested interest in knowing these things.

Wed, 08/20/2014 - 17:17 | 5122044 optimator
optimator's picture

Or the internet will be down and calling your brokerage will produce a busy signal for days on end.

Wed, 08/20/2014 - 16:28 | 5121797 Bloppy
Bloppy's picture

Wish somebody would take away the crackpipe, we can dream, I guess.

Elsewhere- Business Insider bans all reader comments on any stories related to Ferguson:


Wed, 08/20/2014 - 17:14 | 5122023 disabledvet
disabledvet's picture

Yeah...that place could get real ugly. What sense does a surging dollar and surging oil make? Definitely not "Fed hawkishness."

Let's start with winding down the free money first...

Wed, 08/20/2014 - 16:10 | 5121736 Devotional
Devotional's picture

I get a feeling the FED wins ... 

/ no sarc

Wed, 08/20/2014 - 17:39 | 5122187 ArkansasAngie
ArkansasAngie's picture

And the us has just been slated to see exports get creamed and the trade balance through the roof. Oh well

Wed, 08/20/2014 - 16:10 | 5121739 alphamentalist
alphamentalist's picture

this relentless raping by mr yellen is going to make my therapist rich

Wed, 08/20/2014 - 16:18 | 5121764 kchrisc
kchrisc's picture

"Hawkish Fed"

The Rothschild FedRes can't be anything other than cornered between a cliff and a minefield. LOL

An American, not US subject.


Wed, 08/20/2014 - 16:19 | 5121766 Rainman
Rainman's picture

AAPL and RCA .... generations of shoeshine boyz loved them both.  

Wed, 08/20/2014 - 16:23 | 5121783 TabakLover
TabakLover's picture

Not to speak for all here.................  but the Fed can BLOW US!

Wed, 08/20/2014 - 16:28 | 5121799 Groundhog Day
Groundhog Day's picture

They r not blowing us but rather ass fucking us

Wed, 08/20/2014 - 16:29 | 5121800 Groundhog Day
Groundhog Day's picture

They r not blowing us but rather ass fucking us

Wed, 08/20/2014 - 16:27 | 5121787 Squid Viscous
Squid Viscous's picture

lol at credit "not buying it" again, and again for years... never seems to correct, maybe your premise is flawed Tyler?

Wed, 08/20/2014 - 16:31 | 5121809 1stepcloser
1stepcloser's picture

The parasite can't last long with high bond yeilds.  Ferguson EBTs will be shut down first..

Wed, 08/20/2014 - 17:09 | 5121965 jubber
jubber's picture

Deja vu again. I remember so well how Peter Schiff got the housing and stock market collapse so spot on but got the inminent demise of the Dollar totally and catasrophically wrong for his clients and followers, I even bought his book...now we have new pundits, Jim Rickards etc saying the same as the US $  surges yet again and Bonds defy gravity as once again the reality is that the US is certainly fucked, BUT Europe,Japan, China are fucked more.

Wed, 08/20/2014 - 17:14 | 5122022 NOTaREALmerican
NOTaREALmerican's picture

Re:  US is certainly fucked, BUT Europe,Japan, China are fucked more.

I guess that's what nobody can comprehend.    When everybody is fucked the same way is anybody really fucked at all.  

Wed, 08/20/2014 - 17:24 | 5122103 Rainman
Rainman's picture

kinda complicated situation you humans got into, huh ?

Wed, 08/20/2014 - 17:44 | 5122216 LawsofPhysics
LawsofPhysics's picture

I, for one, have not been fucked properly in a while.  I will have to speak to the wife about that....

Wed, 08/20/2014 - 17:40 | 5122185 LawsofPhysics
LawsofPhysics's picture

"Soaring" you say?  Are treasury yields back up to the historical averages?   Yeah, I didn't think so.


Wed, 08/20/2014 - 18:20 | 5122395 Babaloo
Babaloo's picture

i was thinking "soaring (?)"  WTF?  Long bonds weren't even up a basis point in yield and five year notes were up a nickel.




Wed, 08/20/2014 - 18:39 | 5122477 adr
adr's picture

Still can't find any reason for Apple's surge. Israel buying all the shares to pay for the Gaza campaign?

Apple stores are deserted. I always see double the amount of employees than customers. Nearly all the customers are there to exchange broken phones.

Thu, 08/21/2014 - 07:01 | 5124282 AdvancingTime
AdvancingTime's picture

 We may soon be forced to face our economic Armageddon. The forces that have driven stock markets ever-higher and upward may be beginning to wane. Many markets became distorted years ago when QE and super low interest rates hit the economy in an effort to lessen many of the missteps of recent years.

This has been more helpful in holding up the underlying value of assets and derivatives it now appears than helping to repair a wounded economy. QE has up to now stopped an implosion of derivatives including the resulting contagion and shock that would have spread throughout the financial system. Unfortunately the economy has not fared as well as these asset prices and in many ways these policies have harmed Main Street. More on this subject in the article below,


Do NOT follow this link or you will be banned from the site!