The collision of global markets and social mood

Thursday, February 9, 2017

Thursday -- Europeans Bonds Love Draghi

S&P E-mini Futures:
Higher but off best overnight levels.

What a difference a day makes. A Draghi/ECB rumor sent European bonds flying. Crisis averted?

Here's one take by Deutsche Bank's Jim Reid (with emphasis):

"Yesterday saw a big rally in global bonds especially in the European periphery and France.

"In the periphery we also saw yields in Italy (-11.7bps), Spain (-7.2bps) and Portugal (-12.8bps) finish sharply lower while 10y Bunds (-5.5bps) – while underperforming – closed below 0.300% for the first time since January 10th.

"While much of the suggestion was that it was just an unwinding of some of the recent selloff, boosted also by strong auction demand in Germany and Portugal, there was a story also doing the rounds on Bloomberg concerning an internal ECB meeting in which Draghi supposedly said that he sees the ECB maintaining an accommodative policy until the end of his mandate in 2019.

"Given the imminent taper is a big part of the recent sovereign underperformance then one can see why markets responded to this."

So once again the markets need the hope of stimulus to stay alive.

If only Twitter could get some. Poor Twitter.

USD consolidating gains but remains a bit inconclusive. Quiet elsewhere but for JPY and SEK weakness, oh, and Bitcoin down over 5%.

Two of China's biggest exchanges just stopped Bitcoin withdrawals.

Volume entered yesterday as prices ripped higher, yet the 30s still could not bust through overhead resistance.

One still ominous news bite regarding Europe comes from "Pricing in the European leveraging loan market is "in freefall", according to one head of leveraged finance."

WTI crude holding above 50.71 keeps it in a possible high level triangle targeting yet higher, as in above 55.24.

NG ripping higher. Would be bullish above 3.494.

Very modest gains for gold, silver, platinum, and palladium, with copper red.

S&P Outlook:
ES 2279.75 held in E-mini futures and 2294.59 was exceeded on the cash S&P. Prices took the cue and rose overnight.

They're not out of the woods yet, having trouble getting above their overnight highs, but it keeps the pressure on.

Trouble is that there is still ample room for a test lower if the market wants to form a large ABC rather than a rising wedge.

Note that if the ABC occurs, the 2238.83 gap would make a nice target. And if 2233.63 held, the market could still be in larger wedge not shown at this scale.

Trouble with that scenario is that the ABC move could simply be the first leg of a larger ABC to the 2150-2200 level due to the fractal nature of the market.

Currently am not seeing much to suggest any of this will occur, up or down, haha. As is the case with wedges, both bulls and bears are somewhat confused.

Since 2009 there seem to have been many wedges across many different markets, which adds to the belief that markets have simply become liquidity gauges.

Therein lies the confusion. Because that's not how markets are meant to function.

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