Christ. This was just the kind of day that makes you dread the rest of the week.
First thing in the morning, traders had to cope with Groundhog Day re: everyone on the face of the planet professing to have some kind of profound take on what happens when 10Y yields cross the 3% Maginot Line. Sure, there’s a laundry list of reasons why this is a big deal, but on the other hand, there’s not going to be an Elmo nuclear moment if we finally do top the “magic” number.
Next up was Trump, kicking the week off with a little xenophobia, insisting that a NAFTA deal might end up being tied to Mexico making a concerted effort to keep the “caravans” from reaching the U.S. border.
Next thing you know, he’ll be tweeting GIFs of World War Z and trying to pass them off as security camera footage from the southern border:
And speaking of morons who shouldn’t be allowed to have Twitter accounts, Jeff Gundlach showed up to Sohn dressed in a clown costume to push a Facebook/O&G ETF RV trade.
So just kind of running down the list there, Treasurys did hold on to losses, but 10Y yields came down from the highs and the curve got right back to flattening which, as Bloomberg’s Brian Chappatta quipped, is about as certain as death and taxes these days (until it’s not). Here’s the 5s30s:
The dollar was obviously one of the big stories today, having risen for five consecutive sessions:
As a reminder, the correlation between 10Y yields and the greenback is, well, back, which could be bad or good for dollar bears/bulls. If 3% holds, well then that short might not get squeezed further, but if it doesn’t, then who knows (more on all of this here).
Trump’s obligatory Monday morning racist diatribe didn’t help the peso which was already under pressure on jitters about Obrador. Remember what we said on Sunday night in our week ahead preview? If not, here:
Oh, and watch the Mexican peso for any further signs that domestic politics (as opposed to Donald Trump) is starting to be the main driver.
On Monday it was both.
Facebook fell as the above-mentioned Krusty plugged his absurd RV trade at Sohn:
U.S. equities were mehhh. It’s worth taking a step back to see how far we haven’t come over the past six sessions:
Aluminum was hit hard to start the week after the Treasury suggested sanctions on Rusal could be lifted. Notably, oil pared losses aggressively to trade higher as the stakes were raised in the Yemen conflict:
Saleh Al-Sammad was killed in the coastal province of Hodeidah on Thursday
— Heisenberg Report (@heisenbergrpt) April 23, 2018
It’s probably time to start paying attention if you’re in EM anything. A soaring dollar and rising U.S. yields are going to sink that ship eventually. The EM ETF is down something like 2% in two days:
Finally, for your moment of zen, here’s a fat redneck in a pink pig suit and too much makeup (literally “lipstick on a pig”) trying to explain why Trump snitched on himself over the weekend:
Reporter: What does Trump believe Cohen might have done to get in trouble with the gov't? What has Trump done that he's worried "Cohen could flip about?"
Sanders: "The president has been clear that he hasn't done anything wrong. I think we've stated that about 1,000 times." pic.twitter.com/65v0QDSJS8
— NBC Politics (@NBCPolitics) April 23, 2018