Tight range overnight with a shaky pop & fizzle on NFP.
NFP payrolls web site was hilariously down as CNBC tried to Nail The Number, but as the numbers trickled out, they seemed to spook the market (295K, w/wage gains).
Elsewhere, BOJ board member Takahide Kiuchi was quoted in a Dow Jones story (thanks again Zero Hedge) that got right to the heart of the developing problem in the JGB market (emphasis mine):
Mr Kiuchi said if the bank continues with the current program, which absorbs nearly all of newly issued government debt, the market will see a drop in liquidity--the ease with which investors can buy or sell bonds when needed. Should liquidity fall, "there is a risk interest rates will rise sharply if some incident or event happens.
"There is a possibility that (the BOJ) would suddenly become unable to buy" its targeted amounts of bonds through market operations, he said. That would call into question the future course of the bank's policy, possibly causing "considerable confusion" in the market, he said.
In a world where central banks have gone from buyer of last resort to the one & only buyer, there is no liquidity. There is no market. There is only price management.
Recent six-sigma events may then have been mere shots across the bow.
USD and euro may prove me wrong -- both trends have continued overnight. But I still think we're close to bounce reactions.
All we need to know: 10-year yield spiked 7.9 bps on the strong NFP number.
Stasis remains, for the moment, in crude and NG. Both could surprise either way.
Gold sees higher rates -- faceplanting this morning.
Of the two scenarios put forth Wednesday, I'm leaning toward #1 which calls for higher highs before a very sharp correction.
The decline thus far from 2119.59 appears corrective enough to view it as a "b" of "3." 2041.88 must hold for this to be correct.