Morning 3-6

Fed Bullard said recession signals increasing and markets shouldn’t be obsessed with March rate cut/. This caused latest leg lower in Risk Stock markets Down all over the world

Stocks IN freefall, Anyone who was short bonds being taken out to woodshed overnight as Ultras move up 11 handles Bonds Plus 6. Panic time in regard to virus as Once was that to be strictly a Chinese issue it has turned into a global panic. Cases now are greater then 100K, from the gamma King Nomura’s Charlie McElligott “Duration [went] ‘offer-less’”documenting the series of limit-up, circuit-breaker halts in Ultras and the absolute crash in long-end yields. “[This is] an investor climate that is fixated on ‘imminent global recession’ via pandemic ‘lock-down’”, he said.
.. with the entire yield curve now trading below the effective fed funds rate suggesting the Fed may have to cut as much as 75bps in two weeks.
The situation in Iran and Italy is dire – I don’t think that’s unnecessarily hyperbolic. Italy will get the help it needs, Iran may not. And that’s tragic. Cases in France and Germany soared. Norway has quarantined 1,300 soldiers and the Netherlands reported its first death (not captured in the chart).
Rate cut odds are going crazy, and, as documented in the linked post here at the outset, funding stress is starting to show up in all the “wrong” places. In equities, we’re nowhere near levels that would get us back into the gamma “pocket” where dealer hedging tamps down volatility.
“S&P futures / SPY options’ cumulative Dealer-Gamma profile remains deeply negative vs spot and thus, the extremely ‘chase-y’ behavior at end-of-day into both selloffs and rallies, with the Gamma ‘breakeven’ remaining painfully far away at 3216”, McElligott went on to say Friday
For what it’s worth, the dollar is riding the largest cumulative 11-day slide since August of 2015

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