Retirement must be on again as the Dow creeps up to close at its highest since 12/28/2007 - no more reassuring sign that we need QE stat!! The high-yield bond ETF (HYG) also pushed to new highs - amid heavy volume - as it left its credit-spread and equity risk reality in the dust (as well as its intrinsic value) but who cares - QE/ESM/OMT/WTF - it's on like donkey kong. At least VIX kept some sense of rationality as it closed near its highs on the day, pricing in somewhat the binary concerns of the next 24-36 hours. Volume was nothing to write home about - nor was average trade size - as S&P futures rolled well off their highs to fall back below VWAP into the close and after-hours (when volume picked up). Commodities were mixed with Oil and Copper up, Gold flat and Silver down as the USD dropped (down 0.3% on the week) and stabilized after Europe's close. Treasuries leaked higher in yield (despite a record-breaking 3Y) but remain below Friday's peak-yield levels.
S&P futures did not enjoy the whole day - despite rallying up to yesterday's closing VWAP - though of course Green is green...
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But The Dow closed at its highest since 2007...
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as S&P/Russell tread water and Trannies surge...
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but HYG (the high-yield bond ETF) had a day - which we can't help feel looks like some index arb efforts given how dislocated it is from intrinsics (lower pane)...
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and the afternoon saw HYG on its own... (forget about call constraints and convexity - yield is yield bitches)...
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though with rates low - it seems the pull of the technicals in the CDS market (black) for HY credit is strong for HYG...
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though perhaps VIX showed some the way - as its short-dated hedge-ness does provide some sense of reality that there is a chance that the Holy Grail is not delivered unto us tomorrow...
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Correlations in general improved today - but stocks (like yesterday) were leading risk-assets lower. The exuberance in HYG dislocated from SPY/TLT/VXX into the close (left chart) and the weakness in Treasuries and stability in JPY crosses this afternoon did not encourage risk-off like we saw in ES (right chart)...
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Charts: Bloomberg