Biggest one day rally in DXY(Dollar index) In almost 2 years has more to do with position squaring then a new change in sentiment. The dollar was sold aggressively as Fed rate cut expectations grew and carry trades were unwound.Today feels like a day where that pressure has finally subsided,look at how much euro and Jpy down vs Dollar , the DXY is taking no prisoners on this rally take a look at the net Changes today. With US rates so low does the Dollar become the new Carry currency? discussion for later date. JPY having its worst day vs Dollar in 7 years these are close to historic moves. Risk On unwinding all the Risk OFF trades, flight to safety trades
Similar to the Dollar but only to upside 30 years bonds have had very few Down days last 2 weeks,today’s action in futures show prices dipping below prior days lows ,a rare occurrence bringing out sellers as prices broke below. Another metric 2s10 yield spread back steepening today wider by 13 basis points,after flattening by ~10 bps the prior day. very Volatile markets as measured by the at the money 3m-10year swap vol,What the so called experts use to Judge volatility in Bond Complex,this metric touched 5 year highs yesterdays but dropping today. treasuries being sold with both hands as Stimulus fever takes Hold
Why the Moves against trend today Even though Trump payroll tax idea went over like a Led balloon in Congress talk is that Some type of Stimulus measure will be done Macro Rubio Said $300 Billion.Not only U.S. fiscal spending A Possibility bu tin Europe as well as ECB chief lagarde Calling on EU to provide as much Stimulus as possible,it looks like $25B Stimulus plan from the EU.Macron said EU leaders agreed to take all measures necessary to avoid Financial and Economic instability.
Just to repeat from this morning High Volatility markets will do extraordinary things
Spoos +3.8%,Dow +3.4%,NASDAQ +4.1%,Dax +.75% what a roller coaster ride there Stimulus for everyone!!!!