The Inefficient (And Delayed) Market Ramp Explained

While little makes sense any more in the New Bizarro Market normal, Dow Jones believes it may have stumbled upon one "reason" for the stung like a bee 11:30 am market ramp. Markets proved once again that they are far from the paragon of efficiency that so many prefer to proclaim - bending their movements to the headline of the day to prove one's point. Today was a perfect example. The mysterious rampapalooza - which talking heads proclaimed must be due to something that means every mom-and-pop should be all-in - seems to be a delayed and reflexive reaction to a erroneous Ohio vote-count that was in favor of Romney. As the chart below shows, the release on of 'dummy data' which showed Romney in a surprising lead from early-voting spurred a bond-rally reaction (against consensus implications). Equities and Gold did not react, but soon after it was refuted (as dummy data) bonds 'topped' and as they sold back off to 'new normal' pro-Obama status quo so Stocks and Gold piggy-backed all the way up to pre-NFP levels. Efficiency at its best...Total no news = 10 S&P points

The 'dummy vote' reaction timeline...


  • 1045ET data released - bonds rally BUT stocks/gold do not move
  • 1100ET 'dummy data' refuted - bonds still rallying and stocks/gold not impressed
  • 1108ET ZeroHedge tweets confirmation - bonds have momentum
  • 1125ET Market realizes - Bonds reverse quickly and stocks/gold piggy-back
  • 1245ET Markets converge at pre-NFP levels - as if nothing happened - no news (i.e. news refuted) and we hold 10 extra points in the S&P, $20 in Gold, and 4bps in TSYs


Of course - ths standard European close ramp is just as likely the reason but efficient it is not...

It does somewhat suggest that the market's consensus view on Bonds reaction to Romney win is incorrect though...

Charts: Bloomberg