For the sixth day in a row, the Dow managed a triple digit gain/loss - the first time since Sep/Oct 2011 - as markets appear to playing out a perfect echo of last year's June FOMC meeting with a ~3% 4-day gain in the run-up to the decision only to give it all back in the next few days. In the same way as last year, despite the rally in stocks, VIX (hedging) is rising, credit is diverging (hedging), and bonds are bid (though this appears more a Taper-off trade this time). Today's volume was among the lowest of the year (even accounting for holiday trading days) but that didn't stop the Dow ended up within a Hilsenrath headline of its all-time highs (though VIX near YTD highs, credit near YTD high spreads, and bonds close to YTD high yields). Silver, gold, and copper were hit hard today (-1.8% on the week) as WTI surged back up to $98.50; the USD retraced back to unchanged on the week (JPY -1%); Treasury yields are now up 4-5bps on the week (unch today); and while stocks looked good off the Friday surge, the last few minutes today saw them give back some of the exuberance back as hedgers turned to sellers (helped by a smash'n'grab in HYG) but all-in-all, equity investors seem very confident that Bernanke won't let them down.
Sixth day in a row of triple-digit moves...
[4]
and this is what happened at last June's FOMC... when everyone it seemed was convinced QE3 was coming (and was disappointed).
[5]
But the last couple of days' exuberance in stocks is tempered by hedging in stocks...
[6]
and credit...
[7]
The USD is unchanged on the week as EUR is rising and JPY is weakening...
[8]
WTI surged as copper, silver and gold all fell in line on the week...
[9]
Charts: Bloomberg and Capital Context
Bonus Chart: The Great Recoupling...
[10]