Bonds were sending very different messages from stocks from shortly after the open (when POMO began) and never looked back. As Homebuilders surged in their HIMO way squeezing everyone yet again, stocks surged back above the crucial 1,700 level in the S&P and VIX was pressured lower... but bonds kept falling in yield. Some said - stocks were rallying on Obama's friendly tones (umm no - oil up and safety bid for TSYs?). EUR weakness drove the USD higher on the day and despite the ubiquitous opening smackdown in precious metals, Gold and Silver ended the day almost unchanged. The belly of the Treasury curve plunged below the FOMC-kneejerk low yields to 7-week lows - with yields down 20-25bps from the FOMC statement (gold still higher and stocks lower). The 4th down day in a row for the first time in 5 weeks with heavy volume into the close as the S&P ended near cash-lows (though the market went apoplectic in the last minute).
Summing the day up - all hail the Fed (can we get afternoon POMOs?)
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Bond and Stocks quite clearly seeing things differently.
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The S&P and The Dow now notably below Un-Taper levels...
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and despite builders following bonds exuberantly, that trade also faded fast as the afternoon progressed (and bonds never looked back)...
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and across QE sensitive assets, it seems clear which is losing faith in the Fed's ability (or perhaps the reality of lower growth is repricing equities even as Taper remains off the table)...
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Precious metals had quite a day...
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and Bonds (especially the belly) are seeing yields plunge...
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Credit markets outperformed stocks today but due to technicals from the roll, apples to apples comps are misleading (though we note IG20 was well bid as it seems IG credit was the preferred hiding place today compared to HY as the selloff escalated)
Charts: Bloomberg