Treasury curve flattening continues to gather pace as 30Y bonds rallied their most in 8 months today (even as the shorter-end sold off modestly) but on the week the flattening is dramatic to say the least. Of course, all eyes were on stocks as the Dow and S&P leaked (post European close) to new highs (and the Russell gained back yesterday's losses and some to close the week's winner +3.5%). Gold (and silver) rallied on the day back over $1200 (but closes -3% on the week). VIX followed a similar pattern to yesterday with an early drop followed by a drift higher as it's clear managers are protecting into year-end. Quad witching and rebalancing provided some fireworks into the close as volume rose and stocks slid (as Nanex noted - something broke - lots of micro-crashes/rallies) as CBOE quotes stopped with 10 minutes to go.
The S&P dropped notably in the last few minutes - back to VWAP..
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The late-day chaos perhaps summed up best by Nanex...
Whoa something broke or screwed up - lots of micro crash/rally events
— Eric Scott Hunsader (@nanexllc) December 20, 2013 [6]
In close up...
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The long bond surged lower in yields today...
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and on the week the flattening is very clear...
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Gold rallied on the day but closed -3% on the week...
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Stocks were well coupled with JPY crosses until the European close and then decoupled... with the closing dump seemingly attempting to recouple...
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After yesterday's disappointing performance, the Russell 2000 surged back to take the victory on the week... (even as the Dow and S&P rolled over)...
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But VIX tracked a similar trajectory today with protection bid all afternoon...
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Charts: Bloomberg