While the Fed would dearly love the market to believe that "tapering is not tightening," the message of today's reaction to merely the sugestion that a taper is closer than 'some' believed says it all about how boxed in the Fed really is. US equities have retraced half the pre-Yellen ramp gains, US Treasury yields had their 2nd worst day in 5 months, gold (and silver) collapsed (limit down for a while); the USD jerked higher (+0.3% on the week). VIX and credit markets had been hinting that markets were restless and while today's drop was only 0.5%, the sad psychological truth is that given realized volatility, it is significant. The ubiquitous late-day ramp saved us from a "deer" day – but nether FX carry nor VIX supported that lift. This is the first 3-day losing streak for the S&P in 2 months.
It just feels like a "deer" day… but not quite… Oops…
Some context for today's move – from when the Yellen excitement began last week… Spot The Odd One Out…
This morning's ECB negative rates comment broke the FX carry game – but the FOMC Minutes recoupled tyhat reality…
Credit remains under-impressed and over-saturated – not exactly supportive of moar buybacks…
and VIX remains bid…
Off the debt-ceiling lows, things are rolling over… led by homebuilders (and it seems financials didn't get the mainstream edia memo that higher rates are good)
Charts: Bloomberg
Bonus Chart: The last time China-US bonds were this far apart, Treasury yields hammered higher…
(h/t Brad Wishak of NewEdge)
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gvdJeshvnQ8/story01.htm Tyler Durden