"HY primary markets are all but shut except for very high quality issuers. And if this trend continues for a while (the probability of which in our opinion is very high), we could envision a world where enterprises, big and small, find it harder to acquire financing across all industries, leading to widespread defaults, even outside of commodities."
The half-life of the latest "market supporting" intervention by the Chinese government: just about 12 hours.
After Vicious Rollercoaster Session, Global Stocks Flat, US Futures Stage Tepid Rebound In Illiquid ChaosSubmitted by Tyler Durden on 12/10/2015 06:53 -0500
After yesterday's rollercoaster session in both the S&P and in oil, where initially stocks soared alongside oil, only to promptly tumble as stops were taken out and as the refiners' inventory strategy was exposed after the DOE's latest weekly numbers were released, it has been a quieter session so far, though maybe not for China where stocks jumped at the open only to fizzle and close at the lows in what appears to be ever less intervention by the market manipulating "National Team."
Considering the plethora of specials on the curve, which included both the 2Y, 3Y and the 10Y, it is hardly surprising that many took opportunity to cover the structural short headed into today's auction by purchasing paper in the primary market.
Global Stocks Fall For 5th Day On Disturbing Chinese Inflation Data; Renewed Rate Hike Fears; Copper At 6 Year LowSubmitted by Tyler Durden on 11/10/2015 06:58 -0500
The ongoing failure of China to achieve any stabilization in its economy, after already cutting interest rates six times in the past year, and the prospect of a U.S. interest rate hike in December, had made markets increasingly jittery and worried which is not only why the S&P 500 Index had its biggest drop in a month, but thanks to the soaring dollar emerging market stocks are falling for a fourth day - led by China - bringing their decline in that period to almost 4 percent, and the global stock index down for a 5th consecutive day.
On a day full of Manufacturing/PMI surveys from around the globe, the numbers everyone was looking at came out of China, where first the official, NBS PMI data disappointed after missing Mfg PMI expectations (3rd month in a row of contraction), with the Non-mfg PMI sliding to the lowest since 2008, however this was promptly "corrected" after the other Caixin manufacturing PMI soared to 48.3 in October from 47.2 in September - the biggest monthly rise of 2015 - and far better than the median estimate of 47.6, once again leading to the usual questions about China's Schrodinger economy, first defined here, which is continues to expand and contract at the same time.
- ECB Haunted by Paradox as Draghi Weighs Risk of QE Signaling (BBG)
- At odds with Republicans, Hillary Clinton to testify on Benghazi (Reuters)
- House tees up conservative plans to raise debt limit (Hill)
- U.S., Russia to Meet at Syria Conference to Discuss Crisis (WSJ)
- Putin Gains Record Support Among Russians Over Syria, Poll Shows (BBG)
- China Plans 2020 Deadline for Dismantling Capital Controls (BBG)
- Nyrstar Drops the Most on Record as Mining Hit by Metal Rout (BBG)
First The Bank of Japan destroyed the Japanese bond market, and then, back in May we warned that The Bank of Japan had 'broken' the stock market. Now, it appears the all too obvious consequences of being the sole provider of buying power in an antirely false market are coming home to roost as Nomura reports the "temporary suspension" of new orders for 3 leveraged ETFs - the largest in the world - citing "liquidity of the underlying Nikkei 225 futures market."
ECB Will Again "Frontload" Bond Purchases Ahead Of The Winter, No Advance Leak To Hedge Funds This TimeSubmitted by Tyler Durden on 10/08/2015 06:56 -0500
Moments ago, as part of its quite stale and otherwise irrelevant minutes of its September 2-3 governing council meeting, the ECB did precisely the same, announcing that as part of its ongoing open-ended QE program (which the ECB expects will be implemented fully by September 2016 "or beyond") it would frontload purchases between September and November because, you guessed it, volatility once again declines in December.
It was supposed to be the day China's triumphantly returned to the markets from its Golden Holiday week off, and with global stocks soaring over 5% in the past 7 days, hopes were that the Shanghai Composite would close at least that much higher and then some, especially with the "National Team" cheerleading on the side and arresting any sellers. Sure enough, in early trading Chinese futures did seem willing to go with the script, and then everything fell apart when a weak Shanghai Composite open tried to stage a feeble rebound into mid-session, and then closed near the day lows even as the PBOC injected another CNY120 bn via reverse repo earlier.
The recent scare that investors may be slowly (or not so slowly) waning in the primary market for US Treasurys is rapidly becoming a distant memory, and after yesterday's 3 Month bills pricing at 0.000% for the first time ever, today's strong 3 Year auction should end any debate, if only for the time being, about interest in US paper.
Good news! Bad news is again great for stocks, and overnight we had just the right amount of bad news from Japan, China and Europe to send stocks surging on the first day of the final quarter.
It was all about China once again, where following a report of a historic layoff in which China's second biggest coal producer Longmay Group fired an unprecedented 100,000 or 40% of its workforce, overnight we got the latest industrial profits figure which plunging -8.8% Y/Y was the biggest drop since at least 2011, and which the National Bureau of Statistics attributed to "exchange rate losses, weak stock markets, falling industrial goods prices as well as a bigger rise in costs than increases in revenue." In not so many words: a "hard-landing."