Everything was calmly elevating just how the central banks want it… and then Iran headlines hit… “Don’t Panic”…
Stocks soared overnight and extended gains through the open with Small Caps (strong dollar) and Nasdaq (tech short squeeze) outperforming. Then when Trump headlines hit about tomorrow’s Iran decision, the S&P and Dow dumped to unchanged…the bounced…
Futures show the overnight hump and then buying panic at the open…
VIX closed with a 14 handle once again…
And Stocks caught down to bonds disdain for the morning exuberance…
Notably, the S&P 500 tagged below its 200DMA on Friday’s open and bounced and today it tagged above its 50DMA and rolled over…
All thanks to the biggest short-squeeze since Brexit…
The yield curve flattened once again today to a new low post-crisis…
And while stocks rallied, yields did not sell-off…and when stocks tumbled, bonds did not move…
Perhaps because every trader who can fog a mirror is now short bonds…
Although interestingly as the Fed balance sheet has accelerated lower (red line below inverted) so Bond yields and Bond vol has decoupled…
Emerging Market Debt continued to slide to fresh six-month lows, and judging by the dollar index trend and the liquidity stress’ lagged effect, there is a lot more to come…
The Dollar Index ended the day higher amid some swings (EUR weakness after a disappointing Sentix confidence print)… BBDXY crossed green for 2018 briefly before closing below the unchanged for the year level…
And as the US Dollar gains, so the Hong Kong version drops back to its lower peg band limit…
And the Mexican Peso is plunging…
And the Turkish Lira dropped for the 6th day in a row…
Oil prices were pushing notably higher – WTI above $70 – ignoring the dollar gains until news that Trump would make Iran decision tomorrow and everyone decided that was time to “sell the news”…
The rest of the commodity space leaked lower on the day…
Finally, we note that with the S&P 500 managing to barely scratch its head above water year-to-date, the picture remains ever-hopeful for 2018 EPS…
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