Yield Curve Collapses To 10 Year Lows, Stocks Stumble Amid "Unprecedented" Bullish Sentiment

Bonds and Bullion are bid and the yield curve crashed as the Santa Claus rally fails to appear for a second day...

 

Gold's gains are S&P's losses as the two converge for the month of December...

 

For the second day in a row, stocks went nowhere despite the promise of the Santa Claus rally... (NOTE the somewhat ridicluous instaramp in the last 2 minutes to get stocks green)

 

Futures show the week so far better - Nasdaq (green), Dow (blue), S&P (red) (note AAPL was down again today, testing its 50DMA)...

 

Perhaps it is because, as Kevin Duffy noted earlier, "8 out of 10 of the best sentiment indicators are in the 99th percentile of bullishness over the past ten years (a period of mostly bull market optimism!).  This is unprecedented..."

 

FANG Stocks are down for the 6th day in a row... (the longest losing streak since Nov 4th 2016)

 

Banks have been under pressure this week...

 

VIX jumped somewhat notably today (3rd day up in a row) - NOTE the VIX hammering into the European close and then it snapped...

 

Despite a heavy tail in today's 5Y auction, yields crashed across the curve and the yield curve flattened dramatically...

 

Perhaps a few funds are seeing the 'value' in bonds?

 

Notably 10Y yields dropped back below 2.4% (YTD unch)...

 

Which is notable, as Strategas points out, a 12/31 close above 2.44% would be the 3rd year of rising rates in a row - the longest stretch since 1981...

 

The yield curve crashed most since Brexit to a new cycle low...(lowest close since Oct 2007)

 

There is some serious problems brewing in Japanese liquidity markets as while Euro- and Sterling cross-currency swaps have bounced back, Yen-USD basis swaps have collapsed to a new cycle low suggesting major USD-funding issues for Japanese entities...

 

 

The Dollar Index slipped lower today...lowest close since Dec 5th

 

WTI was unable to extend yesterday's gains above $60...

 

Gold and Bitcoin continued to recouple...

 

As Gold surged above its 100DMA for the first time in a month... (NOTE - gold suffered a death cross as the 50DMA crossed below the 200DMA)

 

Meanwhile copper is at near 4 year highs...

 

The question is - why are bond yields collapsing and not playing along...

 

Cryptos had a mixed day with Ripple ramping, but Ether, Bitcoin, and Litecoin all sliding...

Bitcoin futures volume picked up today but remains notably lower than last week...

As a fional notes, CFTC reports that net speculative positioning in CBOE Bitcoin Futs is -1371 contracts, or Short 6,855 Bitcoins... so prepare yourself for a short squeeze.

Bonus Chart: WTF!!

 

Comments

troubadourcapital bamawatson Wed, 12/27/2017 - 16:12 Permalink

Q1 will be rough for stocks, especially February.February is a weak season for the stock market, particularly because economic data tends to disappoint in February (weather related reasons).On top of that, Merkel will likely be forced to form a minority goverment in late-January. This is bad for Euro and DAX. http://bullmarkets.co/stock-market-on-december-27-2017-thoughts-outlook/

In reply to by bamawatson

D.r. Funk Wed, 12/27/2017 - 16:10 Permalink

naz infusion-program from open, bout an hourdow machines were-not on at the opendow infusion pivot at 10am, bout a halfhoureverything allowed to drift but with interval monitoringall becomes clear when the final 10min. bullshit forced injection pops upfinal-minutes infusion program was ready, additional credence to this overview,and,overall,attesting,to a fully, commandeered, programmed, fake, illusion agenda stock marketSEE MY FINGER==SUB 11 VIX fabricated forced operation==3% DRAWDOWN LAPSE closer to reaching point of elimination==ADDITIONAL FORGED LEG not gonna convince me [it] can go forever==PROGRAMMED ATH PSYOP ' cant go forever '

lester1 Wed, 12/27/2017 - 16:13 Permalink

Why would any hedge fund or investment firm waste their time on boring US Treasury bonds at 2% when they could buy Bitcoin or stocks like Amazon with a much higher rate of return??

D.r. Funk lester1 Wed, 12/27/2017 - 16:21 Permalink

Love the notion. That's how final stage bubbles are characterized or developed, or whatever. "Oh" "Everyone needs to chase return" "In what is obviously vehicles providing no connection to reality whatsoever" "Oh we're so good look at us, getting artificial status increases even though we're passing them off as authentic ego and status" Fake bullshit. Fake society. Fake people. all goes together, makes whoever does it or falls for it look so stupid, unbelievably stupid in the lens of history

In reply to by lester1

MusicIsYou Wed, 12/27/2017 - 16:24 Permalink

Hardly anybody wants U.S Treasuries. Trump's tax cuts benefit the richest few and not only will the middle-class not see any pay increases, but utility companies (I.E bankrupt water companies) are already planning to vaccuum up tax cuts with higher rates. The tax cuts are increasing U.S deficits and adding to the national debt dramatically. Coupled with the loss of Treasury sales - the U.S is heading for a Soviet Union style collapse.

lester1 MusicIsYou Wed, 12/27/2017 - 16:36 Permalink

No collapse will happen. Sorry. The wealthy Elites and politicians in Washington have too much to lose. You already know what's going to happen..The Federal Reserve will just go on a money printing binge and may actually do something smart like buying phy physical gold bullion from the public to replenish their stock at Fort Knox. 

In reply to by MusicIsYou