Ok Guys, We’re Goin’ On Tour.

Well, the Trump administration is on world tour and predictably, things went awry almost immediately.

U.S. traders woke up to news that upon touching down in Switzerland, Treasury Secretary (and man who isn’t used to being the poorest guy in the room) Steve Mnuchin was quick to beat the trade war drum.

The greenback, already under tremendous pressure from all angles and sitting at its lowest level since December 2014, took a fresh leg down when Mnuchin told a news conference that “a weaker dollar is good for U.S. trade”. It was all down hill (literally) from there:

DXY is now under $90 for the first time in a long ass time:

In keeping with the Trump administration’s pattern of someone saying one thing early in the morning and everyone else trying to do damage control for the rest of the day, Wilbur Ross attempted to Wilbur-splain why Mnuchin didn’t mean what Mnuchin definitely meant. Here’s what Ross said on CNBC:

He wasn’t advocating anything. He was simply saying, it’s not the world’s biggest concern to us right now. What he exactly said was the dollar, just like the Treasury bond market, is a huge market, a very liquid market, it’s not something we worry a lot about day by day.

Even if you’re buying that, it still comes across as decidedly not diplomatic. That is: “We”, “we”, “us”, “us”, “America”, “America”, etc. etc. In other words: just what Trump wants them to say.

And look, if you don’t want to take Wilbur’s word for it when it comes to how Mnuchin and Trump definitely aren’t trying to get the upper hand in a trade war, just ask noted FX strategist (and pissed off mom in line behind you at Target who is going to give the kids one more fucking chance not to touch the Skittles), Sarah Huckabee Sanders:

Press Sec. Sanders: "We still very strongly believe that we have a very stable dollar and that that's a good thing" #tictocnews pic.twitter.com/o4rK9lNPb1

— Bloomberg Originals (@bbgoriginals) January 24, 2018

Just take a moment to appreciate how truly hilarious the look on her face is when she first tries to digest the question:

the moment when a reporter asks Hucka-San about the dollar… pic.twitter.com/saqeLCniEU

— Heisenberg Report (@heisenbergrpt) January 24, 2018

“Convincing markets that it was a misinterpreted slip of the tongue will be much more difficult, given the backdrop of overall Administration policy with respect to international cooperation and trade policy,” Bob Sinche, global strategist at Amherst Pierpont Securities, told Bloomberg.

Right. In other words: given everything Trump has shrieked and tweeted over the past two years and given that just 48 hours ago, he just started a fucking washing machine war with South Korea and a solar panel fight with China, you’ll forgive the market for thinking that when Mnuchin says “weaker dollar is good for trade” he means “weaker dollar is good for trade.”

Here’s what the pound, the euro, and the yen did against the dollar following Mnuchin’s comment:

This is all kinds of fucked up for Draghi and Kuroda, because now, anything they say that suggests they’re feeling more hawkish will only exacerbate unwanted FX strength against a backdrop where everyone has every reason to believe Trump is going to try and drive the dollar even lower.

USDJPY is now at its lowest since the middle of September which, again, isn’t great news for the BoJ if they really do intend to start taking the first steps towards normalization:

So yeah, that was a disaster. Mnuchin also attempted to play down fears that China is set to step back from its support of the U.S. Treasury market and that too came across wrong (more here). Hours later, Ray Dalio – who is of course also in Davos – hinted that a bond market crash might be just around the corner. The Dalio comments looked to have sent yields higher and a solid 5Y auction wasn’t enough to turn the ship around as yields were up by ~2.5bp-4bp across the curve, which steepened. Here’s 10Y yields:

Just in case things weren’t fucked up enough, Wilbur was back on the tape at roughly 11:15 talking about trade and China being “a direct threat”. That triggered a risk-off move which was ultimately faded:

Tech took it especially hard:

Complicating this further was the prospect of pension selling. Credit Suisse said pension funds will need to sell something like $12 billion in stocks over the next several days to rebalance in light of the rally. That would be the largest amount in more than a year for a non-quarter-end month.

Oil soared as U.S. crude stockpiles fell for a 10th straight week (that’s a record). WTI is above $65 for first time since December 2014:

Gold surged to its highest since September 2016:

European shares were lower across the board amid the FX strength and a decline in utilities. It didn’t help that Ross was speaking right at the close:

Meanwhile, in Hong Kong, H-shares extended their record breaking run to 19 straight sessions on Wednesday. The RSI is now at a laughable 90.

Oh, and it seems appropriate to close with the yuan, which is sitting at its strongest versus the dollar since November 2015, just ~two months after the deval.:

Finally, for your moment of zen, here’s Hucka-San one more time…

.@PressSec on if President Trump will invoke executive privilege in Steve Bannon's reported interview with special counsel: "I can tell you the White House will remain and continue to be fully cooperative with the special counsel." https://t.co/u7r11RRt0P pic.twitter.com/PeYiiJklXl

— CBS News (@CBSNews) January 24, 2018