The spread between the 30Y US Treasury yield and 2Y has plunged by 7.5bps this morning (as 2Y sells off and 30Y rallies post-Draghi) to 175bps. This is the flattest curve since Dec 2008 lows (at 172bps) which can only bode poorly for financials...
30Y bonds are bid (juicy yield compared to Europe) and 2Y yields are surging (room for a Fed rate hike)...
Still buying the Dimon Bottom?
Charts: Bloomberg
Initial jobless claims tumbles to 259k (from a revised 277k) near 43 year lows, leaving the smoother 4-week average lower at 267.5k. What we find "odd" about this seasonally-adjusted data is that the employment components of both the Manufacturing and Services ISM data has completely collapsed in the last few months. So what sector of the economy is maintaining the illusion?
Not The Onion...
Not even China tries this level of shenanigans.
Charts: Bloomberg
"They don't quite trust the higher spot prices yet," warned one trader as the changing shape of the Brent forward curve suggests oil producers have been locking in recent gains across the crude futures price structure.
As Reuters reports, producers - who have been hoping that a 20-month price rout has bottomed out - do not have full confidence that a recovery is underway, as seen by the shape of the Brent forward curve out to the year 2020.
Well, the people wanted a "bazooka-sized" surprise from Draghi, and they got it.
For Deutsche Bank's Jim Reid, there is - to put it mildly - a lot riding on what the ECB announces in just about 10 mintues. Recall it was DB just a month ago when, with its stock plunging to near record lows, the bank issued an appeal to the ECB: "Stop Easing, You Are Crushing Us." As it later turned out, all Deutsche did not want is more negative rates, and was perfectly ok with more QE or a two-tier system, but more NIRP by Draghi seems unavoidable. Which is why as Reid asks, "is today's the most challenging central bank meeting in living memory."