Sour Note.

Well, an eventful week ended on a sour note, which is a shame for the bulls because Thursday was a barnburner.

Generally speaking, this was not a great stretch in terms of the mood. Between the junk bond debate, equities looking jittery both at home and abroad, the flattening curve, and a dollar that is no longer responding to tax talk, there’s a palpable sense of angst.

In a testament to that, gold and the yen were bid on Friday:

GoldYen

Two straight weekly declines for the S&P:

SPX

The Dow also fell for a second week. As you can see, this is the first time the benchmarks have fallen for two straight weeks since August.

But don’t worry, because tax reform is a “free call option” according to Piper. “The S&P 500 will reach 2,850 by 2018 (10% gain from last close), driven by continued economic expansions, and the tax reform will act like a free call option,” Piper Jaffray technical analyst Craig Johnson writes in a new note.

Notably, a block trade in 10Y futures (15,000 TYZ7 contacts bought at 124-30 at 9:05am ET) pushed 10Y yields lower, short circuited a dollar rally and pretty much set the tone.

DollarYields

Speaking of the dollar, this was the worst week in more than two months, which doesn’t say much for the market’s faith on the above-mentioned tax reform effort:

DXY

Mom-and-pop’s favorite junk bond ETFs managed to rebound after three consecutive weeks of declines:

HYGJNK

We just witness the third biggest outflow from US junk funds on record:

HYFlows

(BofAML)

Crude surged on Friday, but persistent jitters re: U.S. production and inventory overhang led to the first weekly loss in six:

Oil

Two straight weeks of losses for European shares, with the Stoxx 600 off markedly since hitting a two-year peak earlier this month:

Stoxx600

Worst week for Chinese shares since August as the SHCOMP fell 1.5%:

SHCOMP

As a group, emerging market equities erased the entirety of their five-day skid in just two sessions on their way to a new YTD high:

EMstocks

Turkey is fucked – we’ve been saying that for weeks. The lira took a dive on Friday before recovering while yields on the country’s 10Y bonds hit another record high, because Erdogan decided it was time to put on his rates strategist cap again and suggest that fighting inflation requires rate cuts. As you can see, this situation is deteriorating rapidly and don’t expect things to get any better once Mueller indicts Michael Flynn:

USDTRY

Keep an eye on the Korean won –  it rose for four straight days and is sitting at its strongest since September of 2016:

Won

And finally…

Bitcoin

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