Risk Off

Tyler Durden's picture


Asian equities too a hit, posting their biggest two-day loss this year. The MSCI Asia Pacific Index dropped 1.2%. The losses were situated in the Hang Seng, which fell 2.2% and China’s Shanghai Composite, which declined 1.4%. Meanwhile, Europe is off 1.6% in the aggregate after the second take on Q4 GDP confirmed the 0.3% drop from the initial estimate. And, after yesterday’s sell-off, equity futures are pointing to a weaker open at home across the major indices driven in part by concerns that the Greek PSI will not get the required 75% participation as reported here yesterday. In the US, government bonds are in rally mode with the 10-year Treasury note yield down 4bps, to 1.97%; the long bond is rallying 5bps, to 3.10%. Across the pond, government bonds are performing as one would expect. Benchmark German bunds are rallying 4bps, to 1.78% while France, Italy, and Spain are selling off anywhere from 5 to 9bps. In the FX market, the US dollar is enjoying a flight to safety bid against major currencies. The DXY index is up 0.5%. Not surprisingly, with risk being taken off the table, commodities are taking a hit. WTI crude oil is down 60 cents, to $106.10 per barrel. Industrial metals are taking a hit too; copper is off 1.6% to its lowest level since mid February. In Europe, the LTRO continues to not work at all as the ECB deposit facility rose to a new all time record of €827 billion as cash parked with the ECB is not being used for any other purpose, and the net money from LTRO 1 and 2 is now less than the cash added to the ECB from Europe's banks.

via ML and GS

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GetZeeGold's picture



Hot damm......everything appears to be fixed.



French Frog's picture

Hmmmm ... 'risk off' .... let's see how long it will take this time for the shorts to be forced to cover again ...

French Frog's picture

Sounds about right; this is nfp week and most of the time if/when we have a pullback from the sunday night open, the low of the week is generally in after the first 90 minutes of trading on tuesday

HD's picture

Two more days until the real show starts...hopefully.

Ghordius's picture

and then a crescendo until the 20th? Greenspan was at least a Maestro, with him it was possible to do some musical analogy

youngman's picture

We are all waiting for that...but I think nothing will happen..they will extend and pretend again...this game is rigged remember...the rules we play with...like an end date...are open game for the rulemakers...they will just change it..

HD's picture

Wish I could disagree.  The only ray of hope I have is that credit markets don't seem to be buying into the spin this time round.

Ghordius's picture

"In Europe, the LTRO continues to not work at all..."

the old adage was: "you can lead the horse to the water but you can't make him drink"

now to be exchanged to "you can make the camel drink but you can't force his liquids management if he wants to save them for a hotter day"

IMHO, this hump is a good sign

DeadFred's picture

ECB seems inept at it's job. When the Fed tells the banks it will print money but they have to push the market up the banks do their part. The European banks want better deals. Italian bonds will be more attractive at 7% and as far as equities, maybe they've heard of BTFD. The dip is yet to come.

fonzannoon's picture

Same shit different day

Zero_Sum's picture

So, sincere question from a semi-n00b... Is it true that we're in a balancing act situation here to some extent vis-a-vis equities and treasury yields? What I mean is, as investors shift assets into equities and treasury yields rise as a consequence, could the increased interest payments significantly move the date of the next debt ceiling breach forward? If so, isn't Obama stuck between a rock and a hard place, wanting voters to feel the 'wealth effect' of a rising Dow vs. not wanting to have another debt-ceiling fight? I don't mean to imply that this is something that he could completely control either way. Just looking for some thoughts. 


francis_sawyer's picture

ZIRP forever... 'til it blows up... That's your thought for the day... The rest is horseshit...

None of it has to do with Obama... & he's not "stuck between a rock & hard place... Only thing he''' stuck between' is a beer & the putting green...

fonzannoon's picture

Get ready for these words..."Now is not the time to have a debt ceiling debate" "Now is not the time to enact the mandatory cuts from the supercommittee failure" Now is not the time to let the Bush tax cuts expire (except on those making over 250k).

Now is not the time now is not the time. That should be the election rallying cry.

disabledvet's picture

"Senator McCain calls for intervention into Syria." Risk ON.

john39's picture

Adding to world instability, tribal leaders in Libya just declared an autonymous region.

q99x2's picture

Maybe with the low volume of this year and most of that being machine driven the few sellers remaining that still have choices driven by emotion will have no effect on market outcome today, tomorrow or into the hereafter.

We have entered into the 4th dimension where things not previously thought possible are arriving on the indefinite timeline of the future.

What's wrong honey? What is it? Mommy its the line. The line black and heavy in the sky. There there now the great Ben Bernank says it will be ok. You can go on back to sleep. Everything is going to be alright.

Christoph830's picture

I think this dip is frontrunning a so-so jobs number. A blowout number 300K+ might convince the Bulls the rally is for real, while a big miss 100K- might convince Bulls more QE is definitely on tap, both driving the markets higher. A so-so number (100K - 200K) is where the Bears are vindicated and I think that's what we're seeing today.

Dick Darlington's picture
The Hundred-Billion-Euro Bomb Euro-Zone Central Bank System Massively Imbalanced





RazorForex's picture

Gold was screaming for a possible risk-off move yesterday. Everything was pretty much lined up!


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