Coming into today, in its preview of the day’s main event, the ECB decision and presser, UBS’ Paul Donovan said that “the main point of interest at today’s ECB press conference is what color tie ECB President Draghi will wear. That is a far more uncertain outcome than the policy decision.” He was right: Mario Draghi downplayed the recent collapse in European economic data, said the ECB is not concerned about the EUR and promised that the ECB is not engaging in a stealth taper.

And while the market’s initial read was of a hawkish take by Draghi, just before 10am ET something snapped, and the EURUSD tumbled…

… sending the dollar index surging.

Whoever put on the trade, also lit a fire under stocks…

… while 10Y yields dumped, with 3.00% now proving to be a formidable resistance, as all those who just had to dump in the past few days, appear to have been washed out.

Perhaps Citi had something to do with today’s action, issuing a trade reco to Buy 3% 10-Year Treasuries with a Target of 2.65% and a stop out at a close over 3.15%.

What was most interesting about today’s bond market action was the return of the acute flattening that we had observed in the last few weeks until the recent sharp steepening.

Incidentally, today’s curve shifts mean that the mega relative curve trade is now deep underwater to the tune of $15-20MM in book losses in just one day.

As for the strange intraday action, Citi put it best: “There are no real headlines to note. We did hear from Kudlow sounding constructive on trade tensions, while Mattis has said that no decision has been made on any withdrawal from the Iran nuclear deal (deadline for sanction waivers expires May 12). However the comments are not exactly groundbreaking. More likely, it seems that the US equity open is enjoying how yields traded lower overnight. The squeeze upon open seems to have triggered a broader bid for USD assets. As we highlighted in the NY open, it looks like positioning is continuing to be cleaned out and this makes for choppy intraday price action.”

There was no surprise what happened in the Nasdaq however, where as we noted earlier Gartman decided to unveil a new short, only to be stopped out minutes later.

Joking aside, for once the euphoria from a couple of huge beats did not fade away, and tech shares rallied after blockbuster earnings from Facebook and AMD. The Nasdaq 100 Index surged as much as 2.3%, with Facebook soaring 10%, its best day in two years, while AMD lifted beleaguered chipmakers.

That said, the party may not last long: Apple’s earnings loom on May 1, and if the recent stories of a collapse in demand are true, the tech party will prove very short lived.

Still, putting it all together, and stocks are basically where they started the week, and have just barely managed to erase the shock from Caterpillar’s “high water mark” guidance.

Elsewhere, aluminum climbed and Alcoa Corp. gained after Oleg Deripaska was reported to keep control of United Co. Rusal even as the Russian aluminum giant battles for survival in the face of harsh U.S. sanctions, according to a Bloomberg report. Amid the commodity metal chaos, oil went nowhere.



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