US equity markets traded in a narrow range ahead of tomorrow's Yellen testimony with Trannies underperforming and Nasdaq outperforming. Cross-asset-class correlations picked up from their negligible levels on Friday as JPY (and increasingly 5Y bonds) are linked at the hip with stocks. The S&P cash tested almost up to 1,800 (but failed at 1799.94) then faded. Notably from the European close, equity handily outperformed credit markets - which ended closing near their wides of the day. Treasuries ended the day modestly bid (30y -2bps) but T-Bill yields are starting to reflect debt-ceiling concerns. The USD closed unch - drifting lower from overnight strength - but gold and silver rallied on the day (though faded of early highs). Late-day ramp efforts got the S&P green but failed to cross 1,800... and VIX decoupled on the ramp.
The magical 1,800 line for S&P 500 cash was tried and failed twice...
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Trannies underperformed and Nasdaq won as the Dow, S&P and Russell closed practically unchanged
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USDJPY 102 saved the day once again
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Stocks stuck close to bonds today too...
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Treasury Bill markets are starting to reflect a growing fear of the debt-ceiling shenanigans... 2/20 T-Bills closed at -2bp!!
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Credit decoupled from stocks after the European close...
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And VIX did not play along with the late-day JPY-based surge in stocks...
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On the day, gold and silver rallied early and faded...
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Treasuries staged 3 rallies off unchanged...
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Charts: Bloomberg
Bonus Chart: Cross-asset-class correlation (lower pane) picked up but as is clear there is a lot of volatility in the relationships - especially from the US open...
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