Draghi spaketh and the bulls taketh. Risk assets re-correlated in a hurry as Draghi stopped speaking and the US day-session opened (and buoyed by better than expected - though implicitly QE-off - data) risk was on like Donkey Kong. We ripped through recent swing highs, up to the year's highs, and then on to 4-year highs in the S&P and 12-year highs in the NASDAQ. But it wasn't all faeries and unicorns; after the European close, CONTEXT (our proxy for risk-assets) diverged notably lower as stocks extending their trend for the day; Oil dropped hard on rumors of an imminent SPR release and Gold and Silver trod water (after a busy night admittedly). The S&P 500 e-mini futures (ES) stayed in a very narrow range just above early August highs for the rest of the day as Treasury yields also started to stabilize at last Friday's levels with the 30Y up around 12-13bps on the week (notably more than the front-end). JPY weakness (carry-driven) as Draghi spoke, faded in the afternoon and along with the drift lower in TSY 2s10s30s there was a much less ebullient feel to everything - even as stocks decided to close at their highs of the day (as VIX fell back below 16% in the last few minutes down around 2 vols on the day). Volume was mediocre, average trade size above average, as the vinegar-strokes at the cash close saw bigger blocks come through.
Stocks diverged (bullishly) from risk assets after Europe closed as FX carry, Treasury 2s10s30s, and Oil were not buying into the hysteria - and gold and silver lumbered...
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Treasuries and stocks kept pace for a while but soon equities were on their own...
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Credit tracked stocks higher all day with IG18 back under 95bps and HY18 back above $99.50 - and a late day swoon in HYG recovered into the close... (quite a lot of divergence in the afternoon across asset-classes - though credit kept chugging tighter... we heard it was very thin in credit this afternoon so suspect the shorts got flushed early and this afternoon was reracks against ES)...
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Commodities were a little noisy but in general were not as excited (as USD limped lower) but Oil's slump on the SPR rumors was rather notable...
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Treasuries stabilized this afternoon - after selling off in risk-on mode as Draghi explained his dream...
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Equity pain for the bears was evident but the capitulative thrust faded in other risk assets into the afternoon as perhaps the better data (no-QE) and conditionality of OMT (no-ECB printfest) started to sink in to bonds and FX more than stocks - though with financials and Materials outperforming (up 2.3 and 2.5%) who knows...
Perhaps this better sums up the day (h/t @Not_Jim_Cramer)
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All eyes now on Obama during his speech this evening as we assume he will already have the NFP data for tomorrow...
Charts: Bloomberg and Capital Context [10]
Bonus Chart: Medium-term high frequency S&P 500 e-mini - today saw heavy volume blocks at highs with no follow-through...
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Bonus Bonus Chart: YTD for US equity indices - Trannies unch, NASDAQ +24% - all you need to know...
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