Financial news

Stocks Slammed As Credit Cracks, Retail Routed, Yield Curve Craters

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Via Zerohedge

The Fed trying to hit its inflation goal…

Chinese stocks are outperforming Europe and US this week (thanks to a panicking PBOC throwing liquidity at it)…

As buying-panics keep rescuing stocks…

 

European Stocks were uniformly ugly today…

And after a stunningly bad German unemployment print, bunds tumbled even close to record low yields…

 

US markets traded very much in sync today, chopping and popping together with a late-day surge that dragged us “off the lows”…

Dow briefly lost 25k intraday

The buy program hit at around 1530ET – biggest in 3 days…

S&P and Nasdaq both broke below their 200DMA today (joining The Dow and Small Caps already well below it), but the machines did their best to get them both back above that key level…

 

YTD, Nasdaq remains up almost 14% and Dow up around 8%…

 

Semis ended the day marginally higher after almost tagging the bear market (-19.79%) at the open…

NOTE – the machines always ready to fade the opening

The GOOS was cooked… (down a record 28% on the day)…

 

But the entire retail space is getting monkey-hammered…

 

VIX term structure inverted further…

 

HY Credit spreads are blowing out to 4-month highs, eerily tracking last year’s collapse…

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Global Stocks are starting to roll over but Global Bond Yields are collapsing…

 

And HY risk is leading stocks notably lower…

 

Treasury yields tumbled once again today but a weak 7Y auction sparked some yield give-back…

 

Additionally, as Bloomberg notes, rates on 10-year and 30-year securities hit an additional milestone, retracing over half of their climb from the record lows of 2016 to the multiyear highs in 2018. Having broken through those levels, the yields’ next major technical objectives include the 61.8% retracements, which for the 30-year is fewer than 5 basis points away.

For the 10-year, which rose from 1.318% in 2016 to 3.259% in 2018 and touched 2.2081% today, the 50% retracement was at 2.289%; the 61.8% is at 2.0596%

For the 30-year, which rose from 2.088% in 2016 to 3.465% in 2018 and touched 2.654% today, the 50% retracement was at 2.777%; the 61.8% is at 2.6141%

 

This prompted the yield curve to collapse to new cycle lows…

 

And before we leave bond-land, the ED market is implying more than 2 rate cuts by the end of 2020

 

The Dollar Index extended gains, erasing losses from last Thursday’s spike and dump after ugly PMI data…

 

And PBOC threats to Yuan shorts keep failing…

 

Cryptos dropped and popped today to end marginally higher with Ripple and Litecoin leading the week…

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Commodities were mixed on the day with PMs modestly higher (despite USD gains), copper clobbered, and WTI doing a huge circle-jerk…

 

WTI Crude collapsed to a $57 handle before going vertical back to unchanged…early weakness was growth scare and rare-earth escalation fears and the spike was seemingly catalyzed by Iran chatter and rumors that MPLX’s Ozark pipeline would restart early on Thursday…

 

The gold-silver ratio has surged to a 26-year high…

As Bloomberg’s Marvin Perez notes, the surge in the gold-silver ratio adds to economic warning signs including the U.S. Treasury yield curve as trade tensions, a weakening Chinese expansion and sluggishness from Europe to Brazil dim global growth prospects. The ratio’s rise comes even as dollar gains have limited demand for gold, often seen as a store of value in times of market turbulence.

The ratio “has surged to generational highs on the sustained weakness in silver that has been caught in the gravity well of base metals, which have suffered on the worsening trade war,” Tai Wong, head of base and precious metals derivatives trading at BMO Capital Markets, said by email.

Finally, as Bloomberg macro strategist Mark Cudmore notes, dip-buyers beware!

After a decade of reliable support, the Fed may find it tougher to support flailing U.S. stocks in the months ahead. Rates markets are already pricing in the steepest policy easing since October 2008, so it’ll take something extraordinary for the Fed to deliver a dovish surprise from here.





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