Early weakness and volatility was entirely suppressed once European markets closed and stocks traded in a shockingly low range amid dreadfully low volume. All the major indices closed red with the Russell underperforming (and Nasdaq outperforming) as stocks tracked (more loosely than normal) with AUDJPY once again. Treasuries ended the day very modestly lower in yield (30Y unch, rest -1bps). The USD traded modestly higher all day led by weakness in GBP and AUD (as JPY ended unch). Gold closed unchanged as copper (China), oil, and silver slipped. Credit markets remain skeptical and VIX closed higher on the day, despite the late-day ramp efforts to get the S&P 500 green - which failed.
Stocks entirely decoupled from JPY carry in the last few minutes as VIX was slammed lower to juice the S&P up to a green close...but failed
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and as that decoupling took place - VIX was smashed 0.4 vols lower out of nowehere but failed to get the S&P green
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but as is clear - all the action in stocks was in the US open to EU close period (aside from that idiotic closing ramp)
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MoMos were confused - FB new record highs, but TSLA tumbled
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Credit remains skeptical...
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Treasuries went nowhere fast...
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Gold outperformed among the commodities as copper, oil, and silver slid...
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Charts: Bloomberg
Bonus Chart: myPLUG - the government's new low-risk, high-return investment fund?
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Bonus Bonus Chart: For most of the last 15 months, implied correlation has tracked lower and lower as stocks have soared higher and higher as implied volatility has collapsed and the fear of Correlation-of-1 event slipped away into Utopian dreams. Amid the government shutdown, we did see crash risk concerns rising (as implied correlation rose on systemic index vol buying - i.e macro overlays) and that was rapidly dissipated as all turned out bright and shiny. This time, however, things are notably different - the rise in implied correlation is coming at a time of falling implied vol and suggests that while overall complacency remains high (no bid for protection) there are growing concerns of a large event...
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