It happened again. Just like the last five days in a row - post-Europe close euphoria gives way to oops-Europe-will-open-tomorrow-reality dysphoria. The S&P 500 e-mini futures (ES) closed below their 50DMA for the first since November today as it has dropped 7 of the last 9 days. Financials were a disaster (-2%) as the reality of a levered bet on the Bernanke Put and economic growth are unwound on a total and utter lack of trust (back below 100DMA again) and as we noted BofA is starting to converge back with its peers (and broadly financial stocks with their CDS). With JPM back below $36 and its 200DMA and AAPL testing its pre-earnings lows, markets are hotting up and Treasuries were bid all the way to the close with the long-end down 6-7bps today alone (10Y with a 1.77% handle). IG and HY credit underperformed stocks on the day as the JPM overhang continues to pressure the indices - though the skew is collapsing fast. VIX jumped to its highest close in 4 months at 21.87%. IG9 10Y jumped over 8bps more today to 147bps mid, now 30bps from its 5/1 swing low spead. The USD rose further and EURUSD dropped back below 1.29 for the first time in 4 months but perhaps AUD losing pairty with the USD was the bigger news - back to 5 month lows.
ES rips and dips for the sixth day in a row...
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and closes below its 50DMA (light blue) for the first time since November...
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the red rectangle is the shift last year that drive the Fed and ECB to print.
Financials dropped their most in a month with BofA starting to converge back to reality and Morgan Stanley dropping fast.
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JPM lost its 200DMA and closed under $36 for th first since mid January as we note that IG9 10Y widened another 8bps or so (as wide as 149bps offered) and just as we warned HY18 is getting dragged into the fray trading under $94 as IG18 is now +12bps from Thursday's close at 114.5bps! HYG has also collapsed under this realization - as it was a cheap liquid hedge...
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And Treasury yields drop back to 7 month lows and a spectacularly awful 1.77 handle!
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Chart: Bloomberg