Bond Bears Bruised As Yields Hit 3-Mo Lows; Brazil, Mexico, & Turkey Tumble

Ignore the crashing yield curve, slumping rates, disappointing data, and dumping lira... stocks are up bitches...

 

China's National Team stepped in to save the world overnight...

 

European stocks took China's lead...

 

US equity markets extended last-week's gains... (Nasdaq and Small Caps dipped red ahead of the European close) - NOTE stocks closed weak after reports of Trump accusing China of manipulating FX and Fed not being dovish enough...

 

Futures show the Nasdaq dump at the US cash open (and automagic bid back up to unch)...

 

Another day, another short-squeeze - but look where we are closing... (at the open before last Wednesday's plunge)... Is this dead-cat-bounce over?

 

While the S&P couldn't quite make it back to its record high, Trannies squeezed higher to new record highs... (NOTE volume has been sliding notably during this rally)

However, as Bloomberg highlights, there is a mystery at center of today's transportation rally: what's driving it? The supercomposite railroad and airline indexes are up 3.4%, and 1.1% respectively, the most in a month, amid scant news yet there's plenty of social media interest in airlines. Truckers are rising today, though they remain a weak spot in the sector.

Talking of transportation, Tesla was smacked hard early on (erasing all the earnings-night gains) but managed a miraculous recovery...

 

But TSLA Bonds ain't buying it...

 

Cyclicals notably outperformed Defensives on the day...

 

Just as stocks were being bought, Bonds were also bid... squeezing the record bearish bond positioning further...

 

10Y Treasury yields closed near their lowest in 3 months...

10Y Yields hit a 2.81% handle intraday!

 

And the yield curve flattened to new cycle flats... 2s10s back to 22bps!

 

The Dollar Index slipped lower (after tagging Friday stops) for the 3rd day in a row to one-week lows...

 

Pressured after leaked comments from Trump about how hawkish Powell is and that China/EU was manipulating its currency...

 

Offshore yuan rallied back to unchanged on the day, miraculously rallying once again ahead of the US-China trade talks (and a WSJ report that Trump is saying China is manipulating its currency)...NOTE this is the best 3-day rally in yuan since Jan 2016.

 

The Mexican Peso was pummeled back towards 19 as NAFTA auto talks spooked traders...

 

The Turkish Lira tumbled again (NOTE - Turkey is on vacation this week)...

 

The Brazilian Real was routed - dumped to a new cycle low after leftists dominated presidential election polls...(the weakest since March 2016)

 

But The dollar weakened across Asian FX...

 

Cryptocurrencies jumped after Friday's "close" but have limped lower since with Ripple and Bitcoin unchanged...

 

Silver ended the day lower despite USD weakness but crude, copper, and gold managed gains...

 

Gold rallied for the second day, pushing back up towards $1200 (in futures)... this is gold's best two-day gain since March.

 

Gold/Silver rallied back above 80x again...

 

Which appears to be a long-term resistance...

 

Finally, it appears - just as we have seen before - that 'macro-fundamentals' don't matter (for now)...