Russell 2000 Gloom, Camera-on-a-Stick Doom, Bond Yields Boom

For the 5th month in a row, US treasury bonds started with a 2-day sell-off as yields rose arond 6bps today (back to unch from FOMC). Gold, silver, and copper all gained notably (despite a knee-jerk lower on the ADP data). The US Dollar jumped instantly on the ADP print then flatlined for the rest of the day but USDJPY pushed higher. However, stocks chose to ignore their ubiquitous drivers – VIX was slammed lower (stocks ignored it) and USDJPY surged (stocks ignored it) as early weakness in Trannies was overtaken by Russell 2000 losses as the S&P and Dow flatlined in a very narrow range. Shortly after the US markets opened, credit markets diverged notably from equity markets (but caught up into the close). VIX closed lower. The Dow had its narrowest range since Dec – funny what happens when there's no $190 billion repo injection, eh? The S&P and Dow closed marginally green at new record highs.

Perhaps Art Cashin summed it up best – good news is indeed bad news…

"I find it fascinating we're all sitting here worried about prosperity breaking out."

Early weakness in Trannies; extended weakness in Russell – S&P and Dow clung to record highs..

Which left the Russell almost unch for the month…

10Y rates rose back to FOMC levels (with S&P +2% still) as USDJPY also surged…

So stocks ignored USDJPY and also ignored VIX best efforts…

Credit and stocks diverged at the US open but credit rallied back towards the close…

The Dow had its narrowest range since Dec – has tended to signal a short-term turn…

10Y rates are back to breakeven from the FOMC (and 30Y above)

FX Markets were quiet with the main action at the ADP print (USD bid)…

Copper surged on the day as the CCFD unwinds continue to squeeze shorts and unwind hedges. Gold and silver also jumped off the knee-jerk snap lower from ADP…