Crude & Credit Crash, Stocks Slide As Bonds See Best Week In 19 Months



Well that another week… “are you not entertained?”

 

China had an exuberant week (as the rest of the world limped lower) led by Shenzhen and CHINEXT (the small cap/tech indices)…

 

European Stocks were lower on the week, led by Italy…

 

Early dovish comments from The Fed’s Clarida sent the USD  and TSY yields lower and stocks higher, then Trump comments on China were thoroughly embraced by equity algos but not FX or bond markets…

 

US Futures show the Clarida jump and the Trump jump and the late-Friday jump…

 

Late-day weakness spoiled the fun for the day…Nasdaq dropped into red along with Trannies…

 

On the week, only Trannies managed to close green…

 

Materials and Real Estate managed gains and Utes scrambled to unchanged on the week…

 

Nvidia made the headlines as the crypto-collapse hit demand and sent the stock from being up 50% YTD to down 15% YTD in a few weeks…

 

Credit markets crashed notably this week (impacted by GE’s collapse)… with IG spreads blowing out 10bps – the biggest weekly spread widening since Feb 2016…

 

Signaling more pain to come for stocks…

 

Treasuries were well bid all week – especially in the belly…

 

Notably the longer-end of the curve steepened notably this week…

 

10Y Yields broke through the 50DMA…

 

5Y yields plunge 15bps on the week – the biggest drop since April 2017 (after worst week since September 2017) – blowing back below 3.00% to close at 2-month low yields…

NOTE – 7Y yield also closed below 3.00% for the first time since September 17th.

And before we leave the rates markets, it is notable that the market is rapidly losing faith in The Fed – 2019 rate-hike expectations (red) have collapsed, and 2020 and 2021 are now expected flat or a modest rate cut…

 

The Dollar Index broke below a key level this week – 97…

 

While Yuan strengthened against the USD… (note today’s spike after Trump’s trade comments)

 

Yuan weakened notably in the last few days against gold…(seemingly drawn back to its latest peg around 8500 Yuan per ounce)

 

Cryptos had an ugly week as, among other things, Bitcoin Cash fork uncertainty sparked derisking…

 

Copper bounced today after Trump trade comments, PMs managed to hold the week’s gains but WTI plunged…

 

Of course, all the big headlines were taken by crude, which is down for the 6th week in a row, crashing to a $54 handle and its lowest level since Nov 2017…

 

And as WTI plunged, NatGas super-spiked…

 

While all eyes were on WTI, Canadian Western Select Crude crashed to a record low…

 

It seems that 5 ounces of silver is just too rich in this new regime for a barrel of oil…

 

Gold spiked above its 50- and 100-DMA this week…

 

Just as credit is flashing red, so are commodity markets – most notably, Lumber…

 

Finally, we note that monetary policy divergence is at a major turning point that has not worked out well in the past…

And, just in case you were banking on buybacks bringing your bullish portfolio back to life, consider this…

$800BN spent on buybacks year-to-date, and the index is… unchanged!



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Crude & Credit Crash, Stocks Slide As Bonds See Best Week In 19 Months

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