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High-Yield Credit's Worst Week In 15 Months Sends Stocks Sliding

Tyler Durden's picture




 

This week's 35bps rise in high-yield credit spreads (or ~10%) is the worst since at least June of last year and anxiety spread through other asset-classes appropriately as cheap-buyback-funding and liquidity concerns weighed on all equities - most aggressively small caps. The Russell 2000 is down around 4% from FOMC (and for the year) even with today's buying-panic this afternoon trying to rescue yesterday's losses. Much of today's moves were thanks to The Bill Gross Effect - Treasury short-end sold (2Y-5Y +5bps, 30Y unch), corporate bond spreads jumped wider (HY +20bps, IG +4bps), and European bonds (and German stocks) lurched lower. Markets recovered some of the early move but 2Y closed at 2014 yield highs. The USD closed 1% higher for the 11th week in a row to June 2010 highs. WTI crude close +1.5% on the week, gold unchanged, and copper and silver lower. VIX jumped 22% on the week, closing above 14.5.

 

For your consideration... volume was dismal today

 

Stocks rescued from really dismal performance today...as the machines desparately tried to recover yesterday's losses...

 

On the week, it's all red... led by Russell 2000 weakness

 

And post-FOMC, redderer... (but note that the Dow was ramped to almost unchanged)

 

Credit's early weakness recovered a little but nothing like stocks...

 

as HY credit suffered its worst week since June 2013...

 

Divergence?

 

Stocks and the long-bond decoupled...

 

Stocks and JPY recoupled.... then faded...

 

Stocks and VIX remain in love...

 

Treasuries very mixed on the week as The Bill Gross Effect dominated today...

 

The USD rose for the 11th week in a row, with CAD and AUD the weakest (but EUR driving)

 

Pushing the USD Index to June 2010 highs

 

Despite USD strength, gold closed unchanged and oil rose...

 

Charts: Bloomberg

Bonus Chart: S&P dropped from its richest to Fed Balance Sheet...

 

Bonus Bonus Chart: Gold relative to the world's Central Banks' balance sheets has reached an interesting level again...

 

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Fri, 09/26/2014 - 16:13 | 5261024 Bell's 2 hearted
Bell's 2 hearted's picture

"This week's 35bps rise in high-yield credit spreads (or ~10%) is the worst since at least June of last year"

 

recent buyers of covenant lite garbage are loosening their ties and rubbing their (sweaty) necks 

 

morons

Fri, 09/26/2014 - 16:27 | 5261059 Four chan
Four chan's picture

operation whipsaw has commenced.

Fri, 09/26/2014 - 19:33 | 5261553 Its Only Rock N Roll
Its Only Rock N Roll's picture

high yield is STILL only ~ 420 wide, 130bps more until we get to the 20 year average.....

Fri, 09/26/2014 - 16:15 | 5261031 john milton
john milton's picture

Fu'k its friday and no bonus chart...what the hell is this..

Fri, 09/26/2014 - 16:30 | 5261063 StackShinyStuff
StackShinyStuff's picture

Look again

Fri, 09/26/2014 - 16:16 | 5261034 Bell's 2 hearted
Bell's 2 hearted's picture

"The USD closed 1% higher for the 11th week in a row to June 2010 highs."

 

and will only get stronger as QE winds down ... and other central banks start easing (further)

 

Deflation on tap

Fri, 09/26/2014 - 17:15 | 5261227 Redneck Hippy
Redneck Hippy's picture

Fed can't raise rates even if it wanted too, as all stimulus is fungible. 

Fri, 09/26/2014 - 16:36 | 5261087 techstrategy
techstrategy's picture

The entire market is one giant option/float scam.  Everything is upside down based upon the Fed VIX selling painted tape.  Sell all growth cartel holdings.  Raise cash and buy gold.

Fri, 09/26/2014 - 16:42 | 5261100 eucalyptus
eucalyptus's picture

burn it down burn it down burn it down

Fri, 09/26/2014 - 17:09 | 5261203 JetsettingWelfareMom
JetsettingWelfareMom's picture

Time to start growing food...then it costs zero dollars (provided you're not plugged into the system already, anyways)

Fri, 09/26/2014 - 17:24 | 5261248 disabledvet
disabledvet's picture

Market was up huge today.

Fri, 09/26/2014 - 17:40 | 5261291 SeattleBruce
SeattleBruce's picture

What 'market?'

Fri, 09/26/2014 - 17:31 | 5261273 Spungo
Spungo's picture

It's the weather!

(seriously, September and October are the worst months as the days get shorter and shorter and people start getting Seasonal Affective Disorder)

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