In a strangely familiar case of deja vu all over again, stocks surged (alone in the cross-asset class world of economic reality) on the day before an FOMC statement. The Russell 2000 has had its best 10-day run in 3 years, best day of the year, and managed to scramble back to its 100- & 200-day moving-average. Dow 17,000 was another key technical level that was achieved. S&P 500 was levitated on volume around 40% below average into the green for October. VIX was banged under 15 and tracked stocks. Away from the equity-vol complex, asset-classes were unimpressed - HY credit, bonds, JPY, and the USD all diverged from stocks. USD weakened slightly, and commodities all gained on the day. TSY yields were up 2-3bps and HY closed practically unchanged. "Most shorted" stocks rose almost 3% - the biggest squeeze since Dec 2011 - smashing the Russell 2000 higher.
"Most Shorted" stocks (BBG Ticker GSCBNSAL Index) had their best day (biggest short squeeze) since Dec 2011...
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Don't think it was a squeeze? spot the difference...
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Don't forget the last time we were here, Bullard pissed in the punchbowl... Dow tops 17000 into close last minute!
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Gentle reminder of the pre- and post- exuberance at the last FOMC in stocks... but not bonds... (just like we saw today)
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On the day - volume was a disaster - so that means stocks soared...
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The October miracle...
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Off The Bullard lows...
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Russell back up to its 100/200DMA...
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HY credit diverged early then played some catch up but underperformed...
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as did HYG at the close...
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and JPY carry and Bonds decoupled from stocks too
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Treasury yields rose modestly on the day, up 2-3bps on the week - bonds basically gacve back their 4ET-12ET gains from yesterday in the same period today...
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The USD slipped lower (down 0.35% on the week) led by EUR strength (big SEK move on rate cut)
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The weaker USD helped commodities...
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Charts: Bloomberg
Bonus Chart: Divergences (almost) everywhere...
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Bonus Bonus Chart: Where to next Janet?
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Bonus Bonus Bonus Chart: The flip-flopping stock-gasoline world... and what do bonds know about a tumboing demand driven gas price plunge?
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