Bonds Break 7-Week Losing Streak As Fed Balance Sheet Tumbles Most In 6 Years

A week of turmoiling up and down in rates and stocks... for not very much...

On the day we saw the same old pattern of gap up open, then weakness... but this time the latter half of the day saw buying, not selling...

 

The Dow and Small Caps managed to creep back into the green for the week as Nasdaq melted up to Wednesday's highs this afternoon (as bond yields tumbled)...

 

The Dow bounced back to its 61.8% retracement zone.

 

S&P managed to get back above (and close above) its 50DMA...

 

Credit markets had a notably weak week, diverging dramatically from equity risk...

 

Treasury yields were mixed on the week with the belly outperforming (and lower) while 2Y and 30Y were both higher...

 

With the 2s10s curve flatter for the 2nd week in a row...

 

Very oddly, we note that 10Y Breakevens spiked dramatically as stocks ramped this afternoon... but 10Y TSY yields slipped lower...

 

10Y Yields were up 7 weeks in a row ahead of this week but the 10Y closed below last Friday's close of 2.8749% breaking the losing streak...

As Bloomberg notes, That's quite an unusual situation. The last time it happened was in May 2008, and before that it was May 2004. An eight-week streak of higher yields would have been the longest since a nine-week surge ending on April 1, 1994. Here's the S&P 500 during those nine weeks:

But we note that US stocks are now their 'most expensive' relative to bonds since 2008...

 

The Dollar Index limped lower for the second day (coincidentally since China has returned from its new year festivities, banned VIX, and bailed out Anbang)...but ended higher on the week (3rd weekly gain of the last 4 weeks)

NOTE how tight the range has been in the last 36 hours.

 

WTI bounced for the 2nd week in a row but dollar strength hit cooper and PMs...

 

NOTE that WTI/RBOB are back at somewhat key technical levels right before the XIV-driven collapse...

 

Bitcoin bounced back above $10,000 today - back to unchanged for February - but is marginally lower on the week (as the rest of the crypto space got hammered)...

 

Nasdaq and Bitcoin recoupled earlier today but this afternoon saw stocks higher and crypto slipped lower...

Is Bitcoin the leading indicator for The Dow?

 

Finally, You Are (Still) Here...

 

Bonus Chart: The Fed Balance Sheet dropped $23.2bn this week (to 2/21) - that's the most since March 2012. The Fed balance sheet is now at its lowest since August 2014...