It seems the quarter-end rebalancing flows are showing up in bond-land - 10Y Treasuries were well bid again today (-6bps) for the best 2 days drop in yield in over 13 months. Stocks repeated the same pattern of the last 3 days - the best 3 days of the year - by ramping into the open and generally treading water for the rest of the day. Today, Dudley's comments popped the S&P 500 up to its 50DMA and that was the limit as we faded weaker from there and clung to VWAP amid dismally low volume. Credit markets underperformed notably from the open and while VIX closed down modestly, it also rose from the opening levels. The USD roundtripped from strength into the European close to end the day unchanged (up 0.6% on the week) but WTI did not care and surge higher touching $97 and up 3.3% on the week. Copper flatlined. So bonds and stocks (and oil) moving on moar QE hopes but - and (we are running out of superlatives so we will use 'shellacked') precious metals were smashed lower once again closing below $1200 and $18.50 respectively as QE hopes fade?
Bonds best 2 days in 13 months... as we assume balanced funds (among others) buy bonds to keep their 'balance'
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Credit didn't get the same bid as stocks...
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but the S&P did it again - ramped into the open, and faded the rest of the day with a snap lower to VWAP close - doesn't exactly sound like agressive buying to us (especially given the utter collapse in volumes)...
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but stalled at the 50DMA...
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Trannies played a littel catch-up but stocks are still 2% below FOMC levels...
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and Homebuilders played a bit more catch-up today but remain (along with Materials) down over 5% from FOMC (QE?)...
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Gold has retraced over 50% of its post-Lehman gains ($1301), looks set to test the Fib 61.8% correction at $1156...
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Charts: Bloomberg