Wild Week In Charts: Risk Still Buoyant, Vol. Still Low, Trump Still In Focus

Stocks hit records this week although equities were uninspired on Friday as a slump in crude and concerns about Trump weighed on sentiment.

Stocks

The VIX gave double-digits a try, but decided that ultimately, a 9-handle is better:

VIX

10Y yields have moved steadily lower since Yellen’s dovish lean on Capitol Hill with lackluster data, the expanding Mueller investigation, and the failure of the GOP healthcare bill all taking their toll on the outlook for reflation in the US:

Yields

The 2s10s steepened after Sintra but is back to flattening:

Flattening

But hey, at least CTAs got some much needed relief.

Relatedly, the MOVE hit a record low:

MOVE

And you should note the trend in rate differentials:

USGER

Chipotle shares collapsed to their lowest levels since 2013 as investors seem concerned that the company’s latest combo meal offering, “Norovirus with a side of live mice,” isn’t going to be a big hit with diners:

CMG

Netflix was the star, so you know… “chill”…

NFLX

GE weighed on the Dow Friday after disappointing earnings projections:

GE

Financials were laggards with one notable exception (spot the odd one out):

Banks

Oil should have had a good week (Brent topped $50 at one point), but bullish inventory data and Saudi “hope” were ultimately overshadowed by jitters about rising production and, more dramatically, a veritable gut punch on Friday morning when PetroLogistics said OPEC supply in July expected to exceed 33 million barrels a day, highest since December 2016:

OIl

“We have the OPEC meeting in Russia on Monday and that’s going to be top of mind,” Dan Katzenberg, Senior Exploration and Production analyst at Baird said today.

“The meeting gathers several ministers from OPEC and non-OPEC member countries in St. Petersburg,” Reuters reminds you. “Kuwaiti Oil Minister Essam al-Marzouq, whose country heads the joint ministerial committee, said attendees would discuss continuing the production cuts.”

Gold is sitting at its highest levels since late June:

Gold

“The turn of events around investigation into the relationship between Russia and Trump’s campaign has certainly ratcheted up political uncertainty,” ANZ’s senior commodity strategist Daniel Hynes told Bloomberg, in an e-mail. “This is likely to support gold in the short term.”

The dollar is fucked (too much treason)…

DXY

DXY

The euro was up sharply on the week…

EuroWeek

and, already at the strongest in almost two years, climbed to as high as $1.1677 in London on Friday, approaching August 2015’s high of $1.1714

Euro

Between euro strength (occasioned by comments from Draghi which suggested that the ECB chief sees low inflation as a product of exogenous factors – first red shaded box) and jitters surrounding German automakers (second red shaded box), European shares were lower:

Sx5E

German shares had their worst day of the year on Friday as the automakers fell.

Daimler

The DAX chart is flashing a warning sign (if you believe in “lines”):

DAX

DAX vol. surged today:

VDAX

The aussie had a wild ride, soaring to a two-year high versus the dollar…

Aussie3

…on the back of comments about the neutral rate in the RBA minutes which were played down on Friday:

Aussie

Chinese stocks managed to get through the week without any kind of catastrophe after a dramatic start to the week that saw the ChiNext crumble 5%.

SHCOMP

And the yuan was strong against the dollar for the second straight week:

USDCNY

You should note that that is to a certain extent misleading. The yuan fell 0.45% this week (the most since May) against the basket. “The yuan basket tends to drop against its peers when the dollar weakens,” Bloomberg reminds you, adding that “the trend has spurred speculation that the PBOC controls the yuan’s moves so that it boosts sentiment while rising against the dollar, and helps exports by dropping against other exchange rates.”

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