Pins And Needles.

Folks still sorting through Tuesday’s wreckage on Wall Street for clues as to how things are likely to play out for the rest of the week are probably going to be out of luck. Deciphering the proximate “cause” for yesterday’s malaise is an exercise in futility although clearly, the CATcall (get it?) was undoubtedly the straw that broke the camel’s back (there are a lot of animals in there).

Former trade Richard Breslow notes that traditional havens were relatively uninspired despite the equity malaise stateside. “Gold couldn’t even rise to Monday’s highs nor retake any of the moving averages it fell through over the last few days, EUR/CHF ended the day with a tidy gain, USD/JPY fell briefly but ended higher on the day [and] most telling of all, two- year Treasury yields are busy making new highs [while] the 10-year never backed off from 3% as today yield returns new multiple highs,” he writes, in his Tuesday missive.

Speaking of yields, we hit 3.03 on the 10Y overnight:

And the the dollar was back on the rise after paring its torrid rally a bit on Tuesday:

Remember, the correlation between the greenback and 10Y yields has reasserted itself of late:

Bloomberg notes gamma hedging around 119-00 in 10y UST futures on large put open interest there, with widening in long-end swap spreads also hinting at convexity related paying.

Notably, USDJPY blew through Tuesday’s highs before coming off a bit. That, despite more political turmoil in Japan, where there’s talk of dissolving the lower house and holding snap elections. Remember, anything that threatens Abe is yen positive. No matter that Japan is going to stick to accommodative policy through thick and thin – the knee-jerk would almost certainly be yen appreciation. But not today:

Miners and industrials are getting crushed in Europe following the CAT collapse on Wall Street.

Oh, and by God Beijing looks even more determined to keep equities afloat than ever. Although shares dropped on Wednesday after Tuesday’s rally, there was news overnight that China expects RRR cuts of 6-8% in 3 years. So at least you’ve got that going for you if you’re worried about the engine of global growth and trade.

Also, I can’t get enough of this…