Once Europe closed, US equity markets rolled over on what is a new 'lowest-volume-day-of-the-year' led by recent winner Russell 2000. The Dow is now red on the week and the Nasdaq up 11 days in a row. Today was not about stocks though (aside from the close). While CAD saw its best gain in over 2 years, it was US Treasuries (as EUR weakened and Bund yields plunged) that made the flashing red headlines with 30Y back at 15-month lows (at 3.10%) and 10Y -3.5bps at 2.36% as the yield curve flattened even further. 2s30s dropped below 260bps - its flattest since Dec 2012. Un-de-escalation concerns evident in TSYs and credit finally started to bleed into VIX and stocks. Gold, silver, and oil limped higher as US weakened (and copper fell). A desperate buying panic into the close smashing S&P futures to VWAP magically enabled the S&P to close at the confidence-inspiring centrally-planned 'wealth effect' level of 2000.07!!
Come on...
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all thanks to the machines driving S&P 500 e-mini futures back perfectly to VWAP...
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Seriously...
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Treasuries were once again heavily bid...
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And the divergence grows...
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leaving the Dow red on the week...
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and Utes heavily bid into the close - not exactly risk on!!
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The yield curve is utterly collapsing...which bodes very badly for P/E multiple expansion
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Credit markets widened once again...
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FX markets saw USD weakness as EUR strength (QU unlikely) and CAD strength (technicals and tax inversions) dragged it lower
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Commodities trod water (copper dropped) despite the USD weakness
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Charts: Bloomberg
