Equity markets saw their highest volume in 7 weeks as the major indices plunged the most since June 20th, falling back to their lowest level in 5 weeks. 380 new 52-week lows dominated the meager 18 new 52-week highs. The early snap higher in Treasury yields (following the claims data) sparked the 'disorderly rotation' out of stocks that we have warned of and as stocks saw no significant BTFD mentality so Treasuries went modestly bid (ending the day only 5bps higher in yield) with the belly (7Y) 8bps off its intraday high yields. The USD was smashed lower as JPY and EUR strength dominated flow (and carry-unwind) which further helped push the story of the day - gold and silver - up large on the day (+2.1% and 5.6% respectively on the day). VIX surged to 14.5%, credit underperformed, as the Dow broke its 50DMA (15,280) closing near its 100DMA (15,097). Nikkei futures are -530 From yesterday's highs
Heavy volume today... (no matter what one is told by the TV, trading volume was well above average today)...
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There was little to no BTFD mentality (we pulled to VWAP at EU Close as normal) but Homebuilders (which were smashed lower at the open) rallied strongly off the lows...
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The Nikkei 225 (the other beneficiary of carry momo) has been slayed!!
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And while early weakness in Treasuries seemed to spark the disorder in stocks, as stocks held losses so bond 'safety' was bid again...
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Silver was the star of the day with a gain of around 6%. The last 7 days have seen Silver prices rise over 18% - the biggest run in 5 years...breaking above its 100DMA (gold is testing up to its at $1378)
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Gold has retraced all its losses post-FOMC "taper" talk and the S&P has almost fully retraced its hope-fueled gains post that comment. Silver is up a magnificent 6.4% since the 6/18 meeting...
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FX markets were chaotic with a knee-jerk spike higher in the USD on claims and then a rampant unwind of carry afterwards which meant weakening USD (opposite of what one would have expected for a pro-Taper data point but the leverage is all in the JPY and EUR bets)... biggest USD drop in a month...
[13]
Gold appears to have been the catalyst for weakness today - its spike (typically someone in a real hurry to exit a short) moved on its own (very unusual) and soon after bonds, FX, and equities followed...
[14]
Some European fund margined out of its short gold position...? Repatriating those EUR? Wouldn't be surprised given the overcrowded and over-levered positioning.
Charts: Bloomberg