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Yield Curve Tumbles Back Into Inversion As Fed Sparks Mid-Cycle Maelstrom

Courtesy of ZeroHedge View original post here.

Today's chaos was brought to you by the the words "mid-cycle" (market threw a tantrum that The Fed Minutes were not more dovish) and "inverted" (the much-watched 2s10s curve tumbled back into inversion)  and the number '16' (line in the sand for VIX and gamma)

Chinese stocks trod water overnight…

Source: Bloomberg

Source: Bloomberg

European stocks surged on the day, led by Italy…

Source: Bloomberg

Bond headlines dominated Europe with an ugly 30Y zero-coupon auction sparking yield chaos then a bid came in…

Source: Bloomberg

US equities accelerated once again overnight for no good reason but stalled once the Fed Minutes hit (and confirmed the mid-cycle language)…

The S&P 500 stalled at critical resistance once again (NOTE – today's highs for S&P were lower highs than yesterday and that was lower than Monday's highs)…

VIX plunged back through 16 as short gamma scramble sent stocks soaring…

Bond yields, stocks, and the dollar all decoupled as Europe opened, then The Fed sparked recoupling (short-end notably underperformed long-end)…

Source: Bloomberg

A very choppy day for bonds with The Fed Minutes sparking a surge in yields on the hawksih mid-cycle language…

Source: Bloomberg

Roundtrip in TSY yields on the day, selling in Asia and buying in Europe…

Source: Bloomberg

The Treasury curve (2s10s) plunged back to inversion…

Source: Bloomberg

The Dollar index limped lower into the Fed Minutes and weakened immediately after (testing unchanged on the week), before some humans read the document and the dollar spiked…

Source: Bloomberg

Meanwhile, China attempted to squeeze yuan shorts overnight (one-week CNH Hibor rises 44bps to 3.8457%, highest since Nov. 23, three-month CNH hibor +14bps to 3.56967%, one-month +26bps to 3.64817%; both highest since May 14) which briefly sent yuan higher, but that did not last

Source: Bloomberg

Cryptos had a bad day…

Source: Bloomberg

But Bitcoin once again found support at around $10k…

Source: Bloomberg

Gold and Silver were lower on the day (sliding after the Minutes) but WTI tumbled most on the day on notable product builds that offset crude's draw

Source: Bloomberg

WTI fell back below $56…

Finally, we note that if The Fed was less-dovish-than-the-market-demands at the end of July, and the macro data has done nothing but surge positively since then, what option is there apart from a stock market plunge, to ensure The Fed delivers the 50bps that will 'fix' everything…

Source: Bloomberg


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