Bonds, Big-Tech, Bitcoin, & Bullion All Battered As British Bond Market Breaks Again

Gilts broke again today despite BoE’s newly unveiled plans. 30Y Gilt yields were up a stunning 29bps by the close (up 36bps at their highs)…

Source: Bloomberg

UK 10Y Breakevens crashed by the most on record (down over 40bps today)…

Source: Bloomberg

Pushing 5Y real UK yields back to their highest since the GFC…

Source: Bloomberg

“The market reaction so far has been far from encouraging and a sign of how precarious the situation may still be,” Daniela Russell, strategist at HSBC Bank Plc wrote.

“By putting yet another end-date on the new measures, this time Nov. 10, the BOE risks prolonging the uncertainty.”

And before we leave European bond-land, we note that the spread between Italian and German 10Y yields plunged today by the most since June. The rally in Italian debt (and selloff in Bunds) was driven by the prospect of further joint issuance of European Union bonds gave a boost to more indebted nations (which was denied by German officials after the EU close)…

Source: Bloomberg

All of which spilled over into US markets with (implied) yields spiking higher before Europe closed (remember US cash bond market closed for Columbus Day so we work off futures). 10Y yields neared 4.00% based on futures losses but reversed when the German denial hit…

Source: Bloomberg

Rate-hike expectations shifted even more hawkishly in the US today, with the terminal rate now back above 4.70% after The Fed’s Evans confirmed that they are “still waiting for convicing evidence that inflation is cooling”…

Source: Bloomberg

US equity markets did not like the rising rates and dumped all the overnight gains as the cash market opened.

Jamie Dimon’s recession comments spooked stocks further.

Stocks reversed when the German denial hit (and yields dropped), also helped by very marginally less hawkish comments from Fed’s Brainard “Fed is attentive to risks of further adverse shocks, aware that [market] moves could interact with financial vulnerabilities.” However, she also noted that the “1970s taught [policymakers] that there are risks to easing prematurely”, which stole the jam out of the bulls’ donuts. The Dow managed to cling to unchanged until the last two minutes, Nasdaq was the biggest loser..

Brainard also noted that “liquidity is a little fragile” in core financial markets and that The Fed “is monitoring” – which prompted a little more hope of The Fed going full BoE. Treasury liquidity has improved modestly from its peak illiquidity into Q3 quarter-end…

Source: Bloomberg

S&P reversed perfectly at 3600.00 which SpotGamma noted ahead of the open was critical support (Put Wall) after the German denial…

The dollar rallied for the 4th straight day back to one-week highs…

Source: Bloomberg

Yuan tumbled for the 4th straight day against the dollar, heading back towards cycle lows after traders returned from Golden Week…

Source: Bloomberg

Bitcoin fell once again, but held above $19k for now…

Source: Bloomberg

Gold was clubbed like a baby seal, extending weakness back below $1700…

Oil prices sank modestly on the day with WTI back to a $90 handle…

Finally, while the cash bond market was closed today, we note that when they reopen tomorrow, they will be at their ‘cheapest’ to stocks since July 2007…

Source: Bloomberg

So there is an alternative to BTFD in stocks on the back of pivot-prayers once again…