Intraday volatility remains extreme in almost every asset class. Today it was bonds and corn's turn as the former saw 7Y yields jump over 10bps (for the worst 2 days in 6 weeks on moar Taper talk) and the latter dropped 4% on the day to 3-year lows (on record crop expectations). Equity markets performed the now-ubiquitous intraday reversal as early shorting was squeezed back quickly to a green close. short-term VIX was smashed lower soon after the US open but faded back higher into the close to end around 12.5% (but the VIX term structure is now at 4 months steeps). FX markets were very active (JPY -2% and AUD -1% on the week) pulling the USD +0.75% but Treasuries have been battered (10Y near 2 year high yields) with 7Y adding 15bps this week (and Utility and homebuilder stocks have suffered the most). Gold dropped a little on the USD strength, silver stayed green and copper and oil were flat. Oh and Carl Icahn tweeted and pulled Tech and the Nasdaq to outperform.
US equities appeared to stumble shortly after the German confidence data - and collapsed fast after the retail-sales data in the US but once Europe closed we recovered it all... (note - many are talking about Lockhart's comments but in fact stocks did very little after he spoke)
[11]
Shorts tried at the open of cash but were quickly slapped back to reality...
[12]
Trannies suffered (as did the broad Russell 2000) but the Nasdaq was popped highe rby Icahn's AAPL exuberance...
[13]
While 7Y was the worst performer on the day, 10Y is pressing back to 2-year highs and yet another multi-sigma vol day...
[14]
FX markets have been very active...JPY is now 2% weaker on the week against the USD but from pre-open today, the USD actually leaked lower...
[15]
USD 'strength' took some ofthe surge off PMs but it appears the German confidence data was the catalyst...
[16]
Corn prices have been falling but today's almost 4% collapse was significant and drove the price back to 3 year lows...
[17]
As The FT explains:
Propitious growing conditions from Brazil to Ukraine and the US have raised hopes of a sharp rebound in world cereals stocks, easing inflation pressures and pushing food security down the policy agenda.
...
World corn, rice, soyabean and wheat production will break records this year, the US Department of Agriculture estimated this week - “We are in for an exceptionally good year, perhaps one of the best in the last four or five years in terms of crop production,”
...
The US government this year predicts a record domestic corn crop of almost 350m tonnes, up 28 per cent from 2012, and the third biggest soyabean crop, of 88.6m tonnes.
...
“We’re clearly in a transition from a very high-priced, super-tight stocks environment to one of possible sizeable surpluses” But - US crops, planted late due to wet spring weather, could still be vulnerable to summer heat or an early frost.
And as we noted previously - The Hindenburg Omen struck once again.. [18].
But AAPL got the iCahn nod...
[19]
and filled the gap to Q4 earnings' call...
[20]
oh and in case you wondered what was used to lever stocks up this afternoon as bonds sold off and the USD weakened and credit widened and VIX lifted...
[21]
Charts: Bloomberg
Bonus Chart: The VIX Term Structure has steepened dramatically... and tends to signal the stallling of a trend in stocks...
[22]