The Chart That Everyone Is Talking About

Tyler Durden's picture

Something has changed...

For months high yield bond yields have been compressed alongside rising stock prices as the flood of global liquidity from central banks.

ECB buying has driven European junk bond yields below those of US Treasuries and in turn that has pressured global high yield risk lower - despite a rise in leverage to record highs.

However, the last two weeks have seen a big shift in flows as investors have fled high yield funds and pushed into investment grade and Treasuries.


And that has led to a plunge in high yield bond prices...


Not playing along with stocks...

And this time it's not some idiosyncratic sector-specific selling as we saw in Energy HY previously.

And a dramatic decoupling between equity and credit risk-


This is the first major divergence between credit and equity markets since early 2016's global growth scare.

*  *  *
Bonus chart: It's not just credit risk that has decoupled from stocks, equity protection costs have too...

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LawsofPhysics's picture

Step right up!  Everyone is a winner!  Will the green line meet the red line?  When and how will it happen?!?!

Place your bets!!!

Cognitive Dissonance's picture

Nothing to see here. Move along and BTFD.


StackShinyStuff's picture

Futures down, but I will literally suck Gartman's dick if it closes anything but green today /s

NugginFuts's picture

What makes you think he still has one?

cougargainz's picture

I just honestly have no idea what's going on anymore. 

StackShinyStuff's picture

Come on PPT! I really don't feel like swallowing Gartman's load...

buzzsaw99's picture

Agent Smith: ...You must be able to see it, Mr. Draghi. You must know it by now. You can't win. It's pointless to keep fighting. Why, Mr. Draghi? Why? Why do you persist?

Draghi: Because I choose to.

1 Alabama's picture

I say col mustard w/a candlestick in the library

Bill of Rights's picture

Can we see the same charts side by side 2008?

spastic_colon's picture

the humanity! according to the above charts the snp may see a....<gasp>......3% correction

11b40's picture

You must admit, it would be shocking!

Fireman's picture

Count Minsky the Vampire is veeeeeeeeeeery thirsty!

buzzsaw99's picture

the upshot is clear.  i better buy hyg before draghi does.

E.F. Mutton's picture

So....put my 401K in SNAP?  Got it!

syzygysus's picture

If you have a 401k, it has SNAP.


Something will SNAP.

RafterManFMJ's picture

Way ahead of all you fucks! I’m already SNAPing as are all my friends!

(Supplemental Nutrition Assistance Program (SNAP))

semperfi's picture

no - BITCOIN!!!  


Iconoclast421's picture

It is interesting... LQD:HYG does have some validity thus I keep it on my list of market internals. However it tends to be a lagging indicator, or possibly a very far leading indicator. NYA200R is still way too high to take any selloff seriously.

Keep in mind that junk was looking horrid in 2H 2014 but it took the broader market 9+ months to match it in movement.

The_Small_Lebowski's picture

Id love to see where we are Vs the original decoupling charts from a few years back, if anyone has the necesary tools


Moski's picture

"For months high yield bond yields have been compressed alongside rising stock prices as the flood of global liquidity from central banks."

Somethins missin here

SilvaDolla's picture

I noticed that too. It’s like an incomplet.

Bloody Fkn Muppet's picture

As usual, the wolf's at the door, the markets and economies aren't seeing eye to eye, one day all hell will break loose when the cat's let out of the bag, and volotility will be like a bull in a china shop. For now, Alice is through the

jacketch's picture

Very cool sharts.

Son of Captain Nemo's picture

No worries!...

The circuit breakers, parallel line of sight data pipes and modified algo(s) will fix that problem... And when that doesn't cover it?... We can plow all of our hard earned money into a digital "encrypted packet" that no longer is restricted to the # 21 million?!!!...

How's that for insanity?!!!

Number 9's picture

we can take all the world's worth , now and into the future, all the contracts and all the interest and all the resources found and yet to be found, wrap them all up into a couple quadrillion estimated derivatives and trade those as default swaps and other such shenanigans..

now son..that is insane .

Son of Captain Nemo's picture

And as the "backdrop" N 9 to that wonderful mirage of "window dressing" you have the "STUFF" that is really worth something including the humans that are unfortunately in close proximity to "IT" while "IT" is being looted for a mere fraction of those "derivatives"!...

At some point the pot "explodes"... And the SHIT be gettin mighty "REAL"!

Number 9's picture

but we must have full faith in the abilities of those who dreamed up the idea that the world is for sale using digital coupons.. so a couple 100 billion in digital bitcoin is a mere bag of shells compared to the big picture.. a drop in the bucket if you will..;

FreeShitter's picture

If you can talk bitcoin down to 4k, ill send you 500.00

Son of Captain Nemo's picture

No FS you keep all of it in your "bubble". It's ALL monopoly money and has been since 2008 anyway...

Like I've said many times before here. Enjoy the delusional farce while it lasts!

Number 9's picture

the money went full retard monopoly in 1971

Son of Captain Nemo's picture

"the money went full retard monopoly in 1971"


slyhill's picture







AE911Truth's picture

re: "If you can talk bitcoin down to 4k, ill send you 500.00"

I tried to but failed miserably.

RagaMuffin's picture

It's like watching people on a boat that is capsizing. Go to the high side. Jump on another boat at the last possible moment. Collect your wits and the boat you are on starts that miserable yaw..............

RagaMuffin's picture

Aaaaaaaaaargh, may the downvoter catch the last seat on the next Titanic, Aaaaaaaaargh

Aireannpure's picture

DANG ther goes my yield.

rejected's picture

So they're still counterfeiting.

Must be nice to go to the printing room and get some cash to rent that underage hooker or buy that 100 million dollar dream house or loan to the marks at 18%.

Oh well,,, everyone seems to not care and they say the economy is getting better all the time. How those in the past never figured this out is a mystery.

govtsucks's picture

"... and nobody seems to notice, nobody seems to care."    George Carlin

donebydoug's picture

Seems normal to me.  HY is junk.  The market's earnings are real.  What's the problem?

Iamanisland's picture

ok - let's cue the Irish Rovers for the Unicorn song....just sing along .....see lyrics here:

Solio's picture

Produce more charts so that we can keep on talking. Ever more.

LightBulb18's picture

The federal reserve should introduce insurance for stock buyers to protect people from losses.

Iamanisland's picture

Me thinks they already

LawsofPhysics's picture

LOL!!  That is essentially what the CDS "market" is all about...

california chrome's picture

Waking up to bright red charts with coffee just the way I like it. Booyah.

Calculus99's picture

I got Dow data going back 100 years and right now it looks just like the market in about 1927/28. 

If right, stocks have about another 2%-50% of strong upside. If so the chart will look EXACTLY like 1929...

venturen's picture

You didn't have every single Central Bank in the world printing itself to death!