It seems high-yield credit was on to something as we noted last night (here [2] and here [3]). Today's matrix-like collapse in equity perceptions of decoupling and central bank largesse sets up for more of the same as we suspect the ECB will hold off from acting until post-Greek-election to ensure the M.A.D. 'game' remains in place and with rates where they are, Bernanke will have to come up with some magical wording for his next QE raison d'etre. Today's 2.5% drop in the S&P 500 back below its 200DMA, its largest single-day drop in seven months, and the accompanying flood into safe-havens has left Gold and Treasury Bonds now outperforming Stocks for the year (with the Dow red YTD). S&P 500 e-mini futures volume was it highest of the year as we sit at the edge of the waterfall level from last July/August's plunge. Gold's 4% gain is the biggest day since January 2009. Treasury yields plunged to new all-time record lows with 30Y showing a 2.50% handle and 10Y a 1.43% handle. All the high-beta hope names were crushed with financials down 3.7% - their largest fall in 7 months (with the majors even more). VIX jumped 2.6 vols to close above 26.5% at 7 month highs. What is perhaps most disconcerting is the total lack of bounce into the close now two days-in-a-row - deer, meet headlights.
[4]
S&P 500 back under 200DMA, biggest drop in 7 months - close to unch YTD (as the Dow closes red for the year)
[5]
Gold's 4% rip is the largest single-day gain in 41 months!
[6]
and longer-term things are getting scary...
[7]
as YTD, Bonds are the winner now followed by Gold and the USD...
[8]
Charts: Bloomberg and Capital Context [9]
Bonus Scary Chart: If the relationship between broad risk-assets (TSY levels and curve shape, FX, commodities, spreads, and PMs) from April persists then a longer-term CONTEXT [9] is implying the S&P 500 should be 100 pts lower...
[10]
Deer courtesy of Roman