Overheard in Washington today...
Equities slipped, the dollar gained and the Treasury yield curve flattened further as markets reacted to the suggestion that Senate tax writers will release a bill Thursday, according to Senate Finance Chairman Orrin Hatch.
Stock indexes across the Gulf were among the world’s worst performers, with Saudi Arabia’s Tadawul All Share Index falling the most in a year before paring losses.
Since the Saudi shenanigans, bonds and bullion are outperforming...
Trannies and Small Caps are notably weak as Dow, S&P, and Nasdaq cling to unch on the week... (Small Caps worst day in 3 months)
The Dow was desperately pumped back to green by the close... another new record high...
It was also a very weak breadth day...
Blue Apron was very red...
And Red Robin shareholders were blue...
Tax reform hopes faded notably today...
We also wanted to noted this chart - have you ever seen a chart so placidly plodding higher without a heart beat?
High yield credit markets continue to signal trouble...
And as the cost of protecting credit has recently surged, so the cost of protecting stocks has decoupled from the underlying...
Equity vol has ben languishing for months but the last wek or so has seen FX and Rates volatility collapse... (FX Vol now at 3 year lows and Rate vol at record lows)
High yield bond prices (HYG) are the furthest below the 200DMA since the election...
Treasury yields were mixed with the long-end lower in yield and short-end unch...
With the yield curve crashing through 80bps - flattest since Nov 2007... This is the 8th day in a row of flattening - the longest streak in two years! Who's to blame?
Elsewhere in the world, Venezuela is bloodbathing...
The Dollar Index rebounding from yesterday's tumble but rolled over into the end of the US session back into red on the week...
Bitcoin slid again today, but held above $7000...
WTI fell vey modestly clinging to post-Saudi gains...
Gold was slightly lower today but continues the chaotic trading patterns around the US equity open...
But crude remains the week's commodity winner while copper is lagging...
And finally, there's this... worst day for small caps in 3 months today...