Now its getting interesting. 30Y yields fell the most in 5 months today back to 5 month lows, 10Y yields crashed to all-time closing lows, and Gold surged by its most in 4 months (and 2nd most in 7 months) as stocks started to accelerate lower. Gold is unch on the week now as 30Y is -21bps and 10Y -14bps to 1 1.69% handle - incredible. Between the Philly Fed's confirmation of deceleration in US macro data and Europe's increasingly crescendo-like implosion, is it any wonder that the decoupling thesis has given way to reality. S&P 500 e-mini futures repeated the early rally late fade pattern of the last 8 days but this time it was more aggressive as ES pushed towards 1300. CAT was a dog today accounting for 25% of the Dow's losses and AAPL tumbled further - heading towards a 20% retracement off its highs. Financials tumbled further with Citi inching very close to red YTD (and JPM falling rapidly). Credit markets, which led the selloff, continue to slide but this time with equities in sync. Equities went out at their very lows of the day at 1300.50 (at 3.5 month lows) as VIX soared over 24% to close at its highest in 5 months.
Is BTFD DOA?
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30Y Treasuries plunged but 10Y fell to record closing low yields!!!
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and Gold is back near unch of ther week as the PMs soared today...
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Financials are rapidly losing ground with Citi and JPM about to go red YTD...
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Treasuries and Stocks now back in sync and leaking quickly...
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as Treasury yields just plunged today - and the very short-end has pushed up in yield by over 3.5bps this week...Are foreign bank US offices selling down their carry-guarenteed short-term bills to repatriate cash?
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And credit and equity markets are also now in sync and plunging (but we note we did not see the overhang hitting corporate bonds today - making HYG even more cheap) with HY spreads back over 700bps for the first time this year!
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IG and HY credit are now negative YTD in the US and the nominal price of US equities remains comfortably positive for now. We hope this chart gives a sense for how the credit market (which does NOT trade on a USD numeraire - but on a relative-value risk premium - bps) can provide useful information when equity prices (which ARE priced in USD fiat units of account) get carried away on a wind of reflation. It would seem credit remained a lot less sanguine from the get-go...
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Charts: Bloomberg