Yield Curve Crushed To 10 Year Lows As Stocks Signal Trump-Tax-Plan Won't Pass

Tyler Durden's picture

The bond market's reaction to the Trump Tax Plan...


Bonds and Bullion were immediately bid and stocks and the dollar sank on the Trump Tax plan release - but as Europe closed, gold was 'managed' down, leaving bonds outperforming on the day... And stocks back to unchanged as the market realized there is little chance of this bill passing... (So Bonds price out a little more growth hope and stocks flat on status quo and Powell)


The immediate reaction in stocks to the release of the Trump Tax plan was disappointment - sending stocks lower and VIX higher - but that was quickly met by the machines crushing VIX back to a 9 handle...


And as it became clearer that this bill was a non-starter, stocks roared back...


Some of the bigger reactions to the Tax Bill were homebuilders...


And Private Equity shops (Apollo, KKR, KW)... though there did not appear to be anything in the tax bill


And TSLA kept falling (not helped by lower EV credits in the tax bill), tumbling back below $300...


Finally, Bank stocks outperformed the market... as the yield curve crashed...


High yield bonds did not love the tax plan...


Treasury yields were down across the board having fallen in the early European session then legged lower on the Trump Tax plan release...


10Y seems to bid in Europe...


With the 'growth'-related 5s30s curve slumping to new cycle lows...


Breaking down to new cycle lows - flattest since 2007...


The Dollar Index ended lower on the day but was whipsawed around quite a bit... like the other markets, FX seemed to signal no hope for the tax bill passing...



Crude rallied on the day but copper, silver, and gold ended unchanged after jumping on the tax plan...



The bottom line from the reaction by markets seems to be traders are not expecting this bill to pass at all... and bonds are signaling the recent reflation exuberance is now fading fast.

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Clock Crasher's picture

From Mac10's PonziWorld

Meanwhile on the topic of today's Fed meeting, below I mapped the 2017 Central Bank meetings against the S&P 500. The way CasinoNomics works is that you buy the S&P futures leveraged 10x two weeks ahead of the first monthly CB meeting. Then you sell when the last Central Bank meets for that month. HINT: That would be today for this month. Then you collect your 4,000% annualized return without a nickel of drawdown, rinse and repeat until next month. That's at least what Skynet does, I can't speak for anyone else. Of course a real shill holds the entire time and prays this isn't the time when the 50 day breaks...


chart image https://1.bp.blogspot.com/-1osXEoI24Yk/WfoVYubznzI/AAAAAAABYhQ/A1RZlS-aJ...

yogibear's picture

DOW to new records daily!!! 

Keep buying!


dow 50,000 by 2019.

then the sky turns black

NDXTrader's picture

Dow +80...ZH: "Stocks signal tax plan won't pass." Jeez, guys. What's more likely is that all of the goodies they took out will be put back in plus some more. Then it will be a big drama in between Christmas and New Year's finally passing by a Pence vote at 3 am. That's usually how they write the script

PontifexMaximus's picture

tax plan will pass as sure as the amen in the church

LawsofPhysics's picture

Interest rates will rise and the central bankers will print even faster, in fact, they already are. When they said "uncharted water" they were serious.

"Full Faith and Credit"

rmopf2010's picture

"they were serious."




LawsofPhysics's picture

Insane isn't it?  The greastest theft/fraud in the history of the planet continues...

"Full Faith and Credit"

NumNutt's picture

Well there goes Christmas....lumps of coal for everyone!

Implied Violins's picture

At least you can afford coal. I'm passing out cow paddies.

John Law Lives's picture

As of today's close, the DJIA has now rallied more than EIGHT THOUSAND FVCKING POINTS off the intraday lows of 15,503.01 on February 11, 2016.  I am sure that is perfectly reasonable...


yogibear's picture

Infinite buying by the central banksters continues.

Fantasyland to the max.

Rainman's picture

Big day for the banksters ... they get Powell and a bonus : death of the hated TBTF branding.

Keltner Channel Surf's picture

Eclectic MixTape:   Track-of-the-Day

Why don't you do right, like some other men do?
Get out of here and get me some money too

(New York:  July 27, 1942)    https://www.youtube.com/watch?v=4zRwze8_SGk

One wonders how the PC crowd would view this today:  a creepy older gentleman, Mr. Goodman, checks out 21-yr-old Peggy Lee, quite lasciviously, shaking his tuckus, as she delivers the verses, with a lyric that dares to suggest women must depend on men for money, while periodically whipping out his phallic clarinet to blow the chorus into her microphone.

Well, guess what – NO ONE CARES !   This is a timeless classic that will be enjoyed many hundreds of years hence, largely for the stylish solos of Benny Goodman and the understated (and underrated) vocal from Ms. Lee, precociously incorporating lessons learned from Billie Holiday re: tone/phrasing, albeit ‘smoothed’ a bit (e.g., not hanging out behind the beat quite so much).

(Fun Fact:  The original version was quite different (!), recorded by the Harlem Hamfats in 1936 as "The Weed Smoker's Dream"
https://www.youtube.com/watch?v=ijxFF2qQAjU  )

Traderone's picture

How do you find the time to produce such gems, trade and play Wii golf in the same session? :)

Keltner Channel Surf's picture

Because I suck at trading, and therefore end each day early with a loss, and have to do something with my time to avoid tearing off the wallpaper with my fingernails :)

Traderone's picture

I too suck at trading therefore I suggest we short it all, get married to our opinions because once we form an opinion it then becomes a fact therefore the market is wrong not us thus enabling us to comment here every evening informing all and sundry that the market is a 'stoopid freaking fraud' and will collapse one day due to those 'stoopid Joos' :)  oh, and buy gold .


BlueHorseShoeLovesDT's picture

I hope you Guys had a good one.

My best day in a couple of weeks

Shorted the ever living crappolla out of W yesterday

Keltner Channel Surf's picture

RUT-ty was a decidedly difficult doji today (after yesterday's short-a-pa-looza bonanza).  Wish I could switch targets at will like you, but for some reason I prefer to attack the same Sisyphean boulder each day.

BlueHorseShoeLovesDT's picture

I understand sticking to what you know, but I don’t see opportunities in the usual suspects every day, not that I even need to trade every day and sometimes I definitely shouldn’t, that said I do like playing the field.

Keltner Channel Surf's picture

Now you’ve done it.  After my nice, self-deprecating comment, you’ve intentionally tried to annoy the faithful here.  Shame on you.   (Aw, what the heck)


And finally, for the upcoming holidays:

Fiat Burner's picture

So stocks rally for a year on this tax plan hype, but rally today because it's not going to pass? Someone fucking shoot me.

Arnold's picture

If you have to ask, you can't afford it.

John Law Lives's picture

Many public explanations over the past ~20 months re. "why" stocks are rallying have been based upon ad hoc reasoning.  Stocks started the current rally in February of 2016, and it wasn't because the "market" was pricing in a Trump victory and tax relief.  One day it will go down hard.  That day might be a bad day for a whole lot of people irrespective of whether they own stocks or not.  When elites fvck things up, many people often suffer.  


D.r. Funk's picture

The inflection in Feb 16 was the hidden hand. Glaringly if you watched intraday that day. (like a 500 dow reversal, following what to that point, was an uninterfered cascading early Jan) Others described it that way too... not just conspiracy people. Meaning over-and-above detectable, a clear decision (by whoever the power division) on the multiweek drop

#1 That moment itself heavily-corroborated a manipulating force under the indexes. Of course giving credence, but the notion that someone wasn't able to guide the indexes if they wanted/needed? Index programming was surmised very early on by me, 2013, probably others.

#2 Time after time after time: corroborating observations and movements and circumstances and contexts (blah blah) persisted following 13 (lol) Just to enumerate.

#3 Time after time (eyeroll but true) The movements followed political narratives. Was so obvious! Feb 16. Uh hello? election? Mid Feb 16 just around the time Dt actually broke through. A collapsing market would elect an insurgent? A steady market would elect Hrc?

I chose to respond to you because it looks like you could actually absorb this with critical thinking and discussion. But it's amazingly obvious how many of you have missed the glaring narratives, cause-effects and market(index) control bullshit ! "ad hoc reasoning" Yeah it's obvious something is moving the indexes separate from headlines/reality (k? duh? no?) "wasnt pricing in trump victory and tax relief" Yeah, the so-called, trump rally doesn't comport to being so! (uh, obvious, amazing how many don't have critical thinking) Statements like the one you made, directly--corrorborate a paradox on trump rally-notion and those statements come up over and over and over. I said, it was fishy, within "days", of Nov 9 and magically 8 months 10 months 11 months later, statements of logic (like yours) highly suggestive of that. Buttresses and feedsback (on the strength) of my own assertion record

Tolomeo's picture

Yes please, someone just shoot me too... WTF??? BIG news (no-news really) day... VIX MUST be killed!!! Still in AWE!!! Futures were pointing to an ugly open, till about 6am when the opened in the US and the fuckers went to work... Then the peace of shit tax plan that will not pass... And within the hour, VIX SMASHED to 9 handle!!! MFkers... It’s completely fuck you in the face manipulated (market!)...

yogibear's picture

ViX to zero

- NY Fed head William Dudley.

Golden Breakout's picture

Be at peace. Equilibrium will be restored. Patience.

Farqued Up's picture

All of this is based on markets existing which we know they don’t. The Fed and their Euro henchmn control it all so this is theoretical jerking off.

Dutch1206's picture

Fuck it.  I'm getting a tax cut in this bill.  I'm all for it.

AGuy's picture

"Fuck it. I'm getting a tax cut in this bill. I'm all for it."

Its not a tax cut, but a tax hike disguised as a tax cut. Obozo would be proud!

Consider if it really was a good thing (a tax cut) while so secretive? why no details? Why are they eliminating major deductions?

stormsailor's picture

so short the piss out of the vix whenever it rises above 9. get wich quick

Ajax-1's picture

I have never understood the addage of "Buy the Rumor" and "Sell the News". Case in point, the rumor is that Trumps proposed tax plan will not pass. Does this mean I should buy stocks? It sounds illogical to me.