Business

While many were surprised when yesterday's 2 Year auction saw absolutely blistering demand, including a near record Indirect take down and a yield stopping deeply through the When Issued, none of that was on display in today's 5 Year auction which concluded moments ago when the Treasury sold $35 billion of Cusip N89 at a yield of 1.496%. The problem: this was 0.9 bps wide of the When Issued and the biggest tail since June 2015. Then again, as SMRA notes, "Five-year note auctions have a tendency to stop fairly wide of the 100pm WI bid side though - in both directions."

Submitted by Pater Tenebrarum via Acting-Man.com,

Gross Output Remains Under Pressure

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

If the risk-on euphoria of punters borrowing billions of dollars in margin debt doesn't materialize, stocks could languish for years after falling 50%.

The financial service industry's Prime Directive is to exploit humanity's core drives of Greed and Fear. Financial service companies promise high returns (fulfilling our greed) that are low-risk, i.e. "safe" (placating our fear of losing our nest-egg).

Some interesting observations by the Goldman sales and trading desk:

Every sector closed positive today with the biggest theme being the reversal in Momentum (SPX +1.4% vs our Momentum pair -2.3%) driven by outperformance of the Short Momentum basket (Long Momentum +99bps vs Short Momentum +3.3%). This is the momentum pair’s largest underperformance YTD and the 5th largest underperformance over the past  2 years. Below shows 1D, YTD and 12M performance of S&P Level 1 sectors.

In case you were under the impression that oil was stabilizing, we thought this chart might help clarify just how "different" it is this time in the energy complex...

U.S. crude inventories are at levels last seen when President Herbert Hoover was battling the Great Depression.

After this week's build - Crude stockpiles climbed 8.38 million barrels to 494.9 million in the week ended Jan. 22, the highest since November 1930, according to weekly and monthly data from the Energy Information Administration.