Today was the Dow's worst Tuesday in 3 months as yesterday's exuberant gains in stocks evaporated on heavy volume. While Polish officials may have been the catalyst, technical levels and AUDJPY weakness were the essential ingredients for today's equity weakness. It appears the pre-payrolls level was key for stocks. Treasury yields plunged back to unch on the week after the Polish Foreign Minister said the "i" world (invasion). The USD sold off but remains +0.25% on the week as gold and silver popped modestly on the headlines. VIX jumped back over 17 (but closed with a 16 handle). Credit markets leaked wider with equity weakness. So good news (macro) was bad news early and then bad news (geopolitics) was bad news later - Fed needs to print some more world peace. The Dow has not gained anything since Christmas Eve.
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Fun-durr-mentals...
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It seems pre-payrolls levels are key for stocks...
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Dow pressed to 3-month lows and notably lower on the year
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VIX broke back above 17 twice today...
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High Yield creit continues to keep pressure on stocks... and as one wise old credit trader noted today:"HY cash was strong this morning but the BWICs (7 so far) from ETFs have begun" - as ETFs are sold, the underlying components (real bonds) need to be sold and as we have explained numerous times, there is no liquidity to cope with the selling thus creating a notable downward pressure on prices and negative feedback loops...
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Treasury yields tumbled back to unch on the week after Sikorski's comments...
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The USD sold off on the Sikorski headlines...
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But gold was bid... (after an earlier shellacking) and then soild of into the close...
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Charts: Bloomberg
