After a brief pause, everything is awesome again…
Trannies exploded higher today (2nd best day since Trump election)… S&P record high, Dow above 25,500 for first time… and on and on…
Despite equity market exuberance, VIX rose on the day, testing back above 10…
YTD, Trannies are up 6.5% (up 8 days in a row – no down days in 2018 yet)… and Nasdaq is still soaring too…
This is the best start to a year for Trannies since 2001.
The gains in Trannies were driven by upgrades across the board for airlines…this is the biggest 2-day gain since July 2016, busting out to new record highs…
Credit markets collapsed to their lowest risk since Feb 2007…
Which is fascinating as debt soars…
Treasury yields tumbled on the day as China denials and a super strong 30Y auction put rest to any ‘end of bond bull is imminent’ arguments for the day…
Yields do remain higher on the week though…
But saw another notable flattening in the yield curve…
The dollar plunged again (biggest drop since Jan 2) to the lowest close snce 9/22/17…
Most notably volatility is picking up in FX land – Something is happening in China…
As Bloomberg notes, offshore yuan strengthened past 6.50 level, on track to erase week’s loss as the U.S. dollar weakened on weaker-than-expected economic data and stronger oil prices. CNH traders downplay impact from removal of counter-cyclical factor in fixing; offshore yuan now at strongest in three weeks on a closing basis.
Gold inched higher on the day as the dollar tumbled, oil gained…
And while airlines soared so energy prices also soared (makes sense), with Brent testing above $70 and WTI above $64.50… then fell back to close unchanged…
Cryptos had a noisy day after tumbling on a number of South Korea headlines with negative connotations, but Ripple ramped on news of a deal with Moneygram…
Notably the Bitcoin-Trust-to-Bitcoin-Futs arb is coming back in…
Finally, you are here…
Bonus Chart: US Macro Surprise data is starting to roll over quite notably (i.e. from an extreme high in optimism, data is disappointing). The last time we were this over-optimistic and data rolled over, the S&P fell 10%…
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