We’ll Get ‘Em Lower.

Things felt a bit tentative on Thursday as the market warily eyes yields for clues as to whether the bond selloff is set to abate and on that front, the news wasn’t great.

Treasurys fell to session lows just after 2, when a block trade in 10Y futs drove yields above 2.77:

30Y yields moved beyond 3% for first time since May.

And as you can see, stocks are taking their cues from bonds:

This has not been the best week:

When it comes to where stocks go from here if yields keep rising, you can think about equities just like Trump is thinking about taxes: “we’ll get ’em even lower”…

"We'll get 'em even lower," President Trump joked, suggesting a 'phase 2' of tax cuts. pic.twitter.com/vzgoPLQ03L

— CNBC (@CNBC) February 1, 2018

Of course opinions vary as to what the number is on 10s before things really get dicey for equities. For Paul Ciana, chief FICC technical strategist at BofA, 2.95% is important as it’s the 150- month simple moving average which hasn’t been exceeded since 2007. For NatWest Markets’ John Briggs, 2.82% is a “a small level” and “the big one” is at 3.05%. And for SocGen’s tech Stephanie Aymes, it’s simple: 3% on 10s we should all be watching:

Whatever the case, it’s clear that equities are going to be watching very closely especially with jobs on deck tomorrow.

Of course retail doesn’t give a shit, which is why they kept pouring money into SPY even during this week’s selloff. This:

UNREAL, another $5b into ETFs last night, brings Jan total to $78.6b, which destroys all-time monthly flow record by $18b (or 30%), this is a nearly $4b/day pace.. pic.twitter.com/h4OaSxAHVz

— Eric Balchunas (@EricBalchunas) February 1, 2018

The dollar gave up all its post-Fed gains:

Here’s Goldman out on Thursday:

We expected the synchronized pickup in global growth to result in a “soggy” USD this year, with the greenback weakening against most crosses. However, the slide in the Dollar since mid-December has been sharper than we anticipated, and many spot prices are now approaching or already through our 12-month forecasts. Yet the rationale for broad USD weakness has not changed: many investors remain structurally long the Dollar at a time when macro fundamentals have begun to favour other currencies.

The euro continues to rise. The econ out of Europe on Thursday only further underscored the notion that a hawkish ECB is virtually inevitable. EURUSD nearing its Draghi presser peak:

Bund yields are at their highest in more than two years:

European shares extended what was already a rough week. The DAX dove 1.4% Thursday, falling below its 50-day moving average:

Oil was up sharply on the day. Goldman upped their Brent targets as follows: 3, 6 and 12-month Brent price forecasts from $62/bbl to $75, $82.50 and $75/bbl. “The rebalancing of the oil market has likely been achieved, six months sooner than we had expected,” the bank said. Here’s WTI, which reclaimed $65:

As noted first thing Thursday morning, there are problems in China. Mainland shares are stumbling with the CSI 300 and the SHCOMP starting the feel the heat as the Shenzhen and the ChiNext tank to six-month lows:

Watch out for spillover risk into red hot Hong Kong (you’ve still got a valuation cushion there though, last I checked).

It was a miserable day for cryptocurrencies which fell on bad news out of India. You can read all about that here, but this says it all:

And for your moment of zen, here is White House Press Secretary (and especially cruel sorority dominatrix) Sarah Huckabee Sanders to explain how other people should “smile more”: