When even Pisani is questioning the fundamental-less QE3-addicted rally, it is perhaps self-evident that volumes were lagging today and stocks gave up most of their gains to end fractionally higher in the S&P 500 e-mini futures. Stocks peaked at the open of the US day-session after an overnight ramp that started in the depths of the overnight session (3amET) as auctions and data became so bad that traders adjusted their odds of a central-banker injection which seemed to spur wholesale buying of gold, stocks, selling of the USD (but also selling of US Treasuries - which did not fit with the QE meme). Gold continued its debasement rally after the US day-session as stocks sold back off as GDP composition weakness became clear. As we pushed into the European close, stocks rallied back to catch up with Gold's performance on the day and then sagged for a quiet low volume afternoon that saw the ES drop back below 1400, below its opening levels as Gold held above $1660. Treasuries limped around in another narrow range day ending a fraction lower in yield but off their best levels of overnight (where 10Y got down to 1.88%). Whether it is discounting Fed easing or EUR repatriation, USD weakness was broad today but JPY and AUD strength was relatively equal providing little carry-driven strength to support stocks. VIX warbled above and below 16% but ended back above as the term structure of vol continues to leak flatter. A solidly green week for stocks, accompanied by falling volumes and average trade size has seen the nominal value of the S&P 500 almost overtake Silver for best-performing asset YTD (after Silver's post LTRO2 collapse). Copper outperformed Gold and Oil on the week - though they managed to more than double the implied move from USD's weakness (-0.5% on the week). The lack of financials in today's push along with only modest energy, industrials, and materials follow through suggests investors are losing hope rather quickly with the QE chatter and the slide into the close did nothing to stay anxiety.
Just your standard 3%-plus 50 point almost-linear lower-and-lower volume melt-up in the US' broad equity index...
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From 3amET, risk-assets soared as the USD was sold broadly. Gold and stocks (blue) meandered along with one another and each time stocks caught up to Gold (orange arrows), stocks leaked back...
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S&P sectors have moved in a generally highly correlated, liquidity-hope-fueled way this week but lagged a little towards the end of today...
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Silver's loss since LTRO2 has dragged it down to only a slight outperformer YTD as ES manages to leak higher in the last four days...
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Correlations remain very noisy as QE-on and QE-off plays havoc but the week's moves in FX seem much more about USD weakness than EUR strength per se - as we try to highlight below the moves all seem very broad-based USD selling (as we suspect Fed action is being priced in over ECB or BoJ action)...
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USD weakness heped gold rally but silver did not benefit as much this week and remains a decent underperformer on the week and the month...
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But as our proxy for risk-assets suggests, equities seem a little full of hope right now that Ben will deliver...
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Charts: Bloomberg