Treasuries And Gold Outperform As Financials Drag Stocks Down In April

Tyler Durden's picture

April ended on a weak tone (after another set of weak macro data) with a day of risk-asset deterioration amid low ranges and low volumes as the S&P 500 broke its 4-day rally streak. AAPL was a standout having given back over 60% of its post-earnings spike and nearing a break below its 50DMA once again. HY credit outperformed with an afternoon surge (in HYG also) taking it back into the green for the month - even as the S&P 500 remains marginally off March's close and underperformed along with IG credit today. Treasuries leaked lower in yield for most of the day but gave half of it back into the close (after Treasuries' best month in 7 months - perhaps a modestly expected give back on some rebalancing). Gold outperformed Silver once again today as Silver fell back to basically retrace all of its YTD gains relative to stocks - both up just over 11% YTD now (note that Silver was +32% prior to LTRO2). Stocks remain rich relative to Treasuries less-than-stellar implications but financials (which had their worst month since November) dragged the broad market down for its first losing month in the last six, as Utilities and Staples the only sectors with a reasonable gain this month. JPY strength and AUD weakness were evident and implied weakness today but in general the USD did very little on this last day of the month. VIX ended above 17% on the day, up almost 1vol as the term structure bear-flattened a little. Overall, a weak-end to the month with little apparent confidence in extending the QE-hope trend of the last few days as stocks remain hugely rich to broad risk-assets overall and most notably Treasuries.

Treasuries (blue line is the Long Bond) outperformed handily on the month as Silver (grey) and European stocks (dark green) undeperformed broadly. Silver and US stocks (green) are no back in sync for YTD gains at around 11.25% as Gold went sideways as did Crude - though the last few days saw stocks, bonds, gold, crude, and silver all push a little higher.


Financials were the biggest losers of the month - even with the significant help they received from QE-hope the last few days. Utilities and Staples outperformed nicely on the month and especially since last Wednesday's open where financials and Discretionary have gone sideways while Staples and Utes have soared.


The recent inflows have helped drive a resurgence - for better or worse - in HYG (the high yield bond ETF) which has pushed into the green for the month - we ahead of its peers. HY (high yield spreads) tried to catch up today - outperforming stocks and IG, but they all remain in the red for the month.

FX markets were dead this afternoon - after the European market close - but there was some considerable risk-off style dispersion during the European day-session...

But the chart below, as we noted earlier, provides all one needs to know about the current state of excitement in both the Treasury and stock markets in the US...


but maybe when we adjust for the debasement of the nominal value of the S&P 500, the relationship between stocks and treasuries becomes a little clearer. Even then the last two weeks shows gold not keeping pace with the disconnect either (as S&P 500 in terms of Gold moves away from its historically tight relationship with bonds)...

And while correlations have broken down in the last few days, today's shift back with gravity in stocks is at least in the right direction relative to our broad-risk-asset-proxy CONTEXT. We will likely reclaibrate for the short-term regime shifts but this divergence remains the medium-term reality check for stocks...

Charts: Bloomberg

Bonus Chart: AAPL's retracement...

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SheepDog-One's picture

Faaat fingerrrrr! He's the man with the Midas touch....he's just too muuuuuch...

DoChenRollingBearing's picture

Sell in April and go away!  <--- DoChenRollingBearing

Muppet Pimp's picture

Looks an awful lot like liqudation time boyz.  He who sells first sells best!

Holding HYG till Ben says uncle tho.

Eclipse89's picture

Couldn't it be that barb cut which transforms humans from having a thinking head into abnormal creatures like Benny and his friend Paulie?

CvlDobd's picture

Between the Tilson fraud and Monster lie it was a banner day for market integrity.

CvlDobd's picture

Anyone want to give me odds the SEC investigates either incident?

SheepDog-One's picture

Gosh wheres the expansion every month? We all know everything must GROW exponentially! A stock down month in April? Horrible....just horrible.

printmoremoney's picture

Extremely low stock volumes. I feel bad for all the High Frequency Servers, all those CPU cycles and nobody to play with (steal from).  Extreme liquidity and no Rally. It will be a race to the exits in May.

ZeroPower's picture

Low equity volumes, really low volumes in credit as well - basically no runs coming through from dealers as neither volatility nor volume is there. Not seeing many axes from the usual suspects either..

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CryingBear's picture


Caviar Emptor's picture

With large layoffs looming over Wall Street, no wonder financias take a lil dive

econprof70's picture

Clearly a month where investors moved to safe havens. You can see that utilities did quite well while the financials were the big loser (have to pick “1 Month” as the interval here):