Despite Yellen, Bullard, and Evans on the tape, markets limped lower on the day. Of course, we had the standard POMO-based ramp but once again credit markets and VIX indicated more than a few were seeking protection rather than loading the boat at these all-time high round-numbers. Stocks had reached their 'richest' in 3 months relative to the Fed's balance sheet and so were perhaps due a little more turmoiling but Treasuries sold off all day (and not on growth expectations) to end unchanged across the curve on the week. The USD oscillated but ended lower (JPY unch on the week) and commodities dribbled higher (though all remain red on the week). Perhaps the most worrisome thing today was the total disconnect between stocks and FX carry after Europe closed...
FX Carry tried its best but stocks entirely disconncted after Europe closed (and POMO ended)...
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Treasury yields bled higher all day - retracing yesterday's gains...
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Credit remains notably saturated still...
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Precious metals went nowhere, oil rose modestly...
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VIX appears modestly bid here relative to the exuberance...
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Homebuilders have slipped notably in the last coupel of days...
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Charts: Bloomberg
Bonus Chart: The Volatility term structure reached a complacency extreme - just as it has a few trimes this year - suggesting more than a 1-2% decline on this dip...
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