Trannies Top; Bonds Bottom; Credit Crumbling

Trannies 3.3% gain today is the best in 20 months - which makes perfect sense given that WTI crude prices are also spiking 2.7% breaking back above $108 (and XOM biggest miss on earnings in forever). Treasuries continue to suffer with 7Y worst - up an stunning 14bps on the day (its biggest jump in a month) as 30Y breaks above 2013 high yields. Credit markets disconnected from equity markets new reality and ended the day wider (as once again credit tracked rates - which does not bode well for stock valuations since it is clearly not a move based on growth). Considerable USD strength across all the majors, gold/silver modestly lower, Oil and copper surging. All-time record highs for the S&P and Dow. BTFATH

Trannies were ridonculous...

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Credit markets were not happy as it seems hedging was the name of the game...

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as once again - just as we saw in early July - credit tracks the big move in Treasuries (and not in a growth-inspired way)... Critically - investors need to understand that if the rise in rates was 'growth' inspired then we would - as has always been the case - see spread compression (growth is a business positive and therefore positive for credit risk)... the weakness in credit as rates rise is more concerns over Taper/unwinds (on the back of data that did nothing but give the Fed more leeway to Taper earlier)

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'Growth' commodities rose, monetray policy commodities not so much...

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it's not all shits and giggles though... Homebuilders dumped from high-beta happiness above a 2% gain out of the gate to unch by the close... but but but those interest rates won't affect the housing recovery...

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The dash-for-trash short capitulation continues... thoiugh we do note that the 'most shorted' index fell back notably from its early 'fold' which may be a sign that covering is done for now...

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