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Europe's VIX At 7-Month Lows As EURUSD Nears 1.35
The decoupling/recoupling we discussed earlier in the EURUSD pair seemed the biggest deal in Europe this week as the 2.5% gain is thge most in a month and takes the cross back to near 3-month highs. Not to be outdone, the VSTOXX (Europe's VIX equivalent) dropped notably and now stands at its lowest in 7 months - dramatically outperforming equity and credit markets on its way as selling vol appears the easiest trade ever (until of course your arms and legs are ripped off by a risk flare). Credit markets outperformed this week as equity underperformed - bringing the two asset classes closer into sync after last week's plunge in credit. Sovereign credit markets were mixed but clearly the high-beta compression trend has stalled as Portugal underperformed dramatically followed by Belgium with the rest generally tracking sideways (and Spain outperforming modestly).
Just like in the US, vol has dropped notably since the pumps of the world money pipe were turned on. Credit has rallied, there is no doubt, but as is clear the relative risk premia for downside protection (equity vol vs credit protection) is quite notably different as VSTOXX reaches 7-month lows.

Interestingly, vol dropped as stock prices (blue above) dropped this week in Europe. Credit markets rebounded off the mid-last-week plunge as it seems like there is more of a convergence trade than a broad risk-on sentiment here - as credit 'over-reacted' short-term.
EURUSD has surged higher this week - up around 2.5% against the USD alone with SEK and CHF following suit. JPY's weakness -1.65% has kept the USD in relative balance as it has only lost 1.35% of its relative purchasing power this week as Oil has exploded over 5%.
Sovereign credit spreads went sideways to wider this week. The ubiquitous, supposedly LTRO-sponsored curve compression trade has stalled now for a week or two. Perhaps next week's LTRO will provide more ammo but we suspect that 1) there will be less demand for the carry trade since the economics are far less attractive now; and 2) the stigma will ward off the biggest players leaving the smaller more risky, least systemically protected banks soaking it up.
Charts: Bloomberg
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Somehow "Europe's Pulse at 7-Month Low" has a better ring...
perhaps sleeping? just a thought ;-)
Sleeping? in a coma...
You could have a bank nationalization in the USA. I would agree with that.
I guess the smart ones knew that was coming. Just like with the dollar. Printing the HELL out of it somehow made it stronger!?!?!?
Why pay for a volatility hedge when the Fed has guaranteed a no risk return?
That's an easy one: "yield hungry investors."
No need for a volatility hedge when all the volume is algo-driven.
Hedge funds have been losing alot of money on hedging costs of all kinds. It seems that hedging will be put on last-minute for the next month or so.
What did the Europeans all get tired of playing with their weenies?
Slap Shot - Terrible Masturbator - YouTube
The markets are truly dead.
I have traded markets for around 11 years now and trading has been the main focus in my life, however, today i finally realised that there is no point carrying on with this farce. the game has been rigged by politicans and central banks as the markets continue plodding on without any real life. what is the point of trading if the market does not reflect fundamentals but is solely controlled by politicians & central bankers pulling the strings.
analysts talk about macro data but this is a pointless exercise as the markets have been decoupled from reality. the markets are now not free to move according to the laws of demand and supply but the whims of politicians. all asset classes including commodities which i traded are responding to one thing .. credit creation.
Best to just buy stuff youll need, imagine how a farmer in the 1800's had to live and stuff he needed and go that route. These idiots are going to put us all back in the 1800's pretty damn quick. Anyone with their lives built on this paper claptrap will be shit out of luck one of these mornings.
and on that note.. Sunchokes in the mail bitchez!
I'm looking to those to run through a still - got stiffed on an order of manzanita pods for the same purposes. What's your plan? Edibles? Fuel?
Very interesting there poor fella. Guy on youtube planted a few tubers in like a 3 gallon nursery pot and at the end of the season the pot was splitting open.. must have been 20lb of chokes packed in there. just edibles for me and since they are indigenous and grow like weeds less work for me. Are you making fuel or hootch ?
Choke-'fuel' (as well as nopales/manzanita) being the plan ;) Other feedstocks for hooch. Might even try some brandy after watching "Distilleries" on History Channel yesterday! Was waiting for sunchokes at the farmer's market or Whole Foods but should bite the bullet and internets me some. Good luck with your endeavors. I've also heard they are PROLIFIC (mostly a good thing!)
No shit, I had a nice profit until they decided to unilaterally change the rules as they went , now I'm down 50%.
Yup I feel your pain sir. Similar kind of situation over here - As "rupeshpatel" said above, the markets have totally decoupled from reality and any sense of normality. They're insane and I've found it extremely difficult to trade recently.
BNO + UGA starting to have that parabolic feel to it... are we slipping into the abyss? Has Berstanky lost control of this mofo ?
Its all transitory..
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Talk about cheap, the ChairSatan needs to take a number.
North Korea is in the game.
http://finance.yahoo.com/news/u-could-pressure-north-korea-tomorrow-quit-100-094000585.html
Retail sales in the US are tanking. The gift of a more valuable Euro keeps giving to US based firms. Extra profit even if they sell less. How much of this increase is merely an excuse to goose earnings once again?
Time to give Stolper at least a golf clap.
I've seen 60 ton iron ingots with more life in them.
Wtf no more tvix shares
Since the stigma of the LTRO will ward off the biggest players, maybe they, the biggest players, are increasing the pace of selling $ assets and repatriating €?
Govt's give interest free money to banks so they will buy the govt's debt, with interest. It's a "Win-Win", right?
Right?
a lot of sad people commenting here.. a lot of $ lost, i guess :) that's the essence of trading as a profession - it's a zero-sum game