I’m short Treasurys, my dude.
Dat’s yo’ word, son?
Dat’s my word, homie. And word is bond.
The “word” was indeed “bond” on Tuesday, or more appropriately “bonds”, plural. And some folks are indeed short.
“Short USTs” was identified as the second-most crowded trade on the planet in the latest installment of BofAML’s closely-watched Global Fund Manager survey, just behind the ubiquitous “Long FAANG+BAT” which enjoyed a fourth month in the top slot.
That of course comes as no surprise:
Tuesday morning’s retail sales data in the U.S. added fuel to a Treasury selloff that, in its most recent incarnation, traces its roots to the European session on Monday, when the ECB’s Villeroy stoked bearish bund bets with a reference to “quarters” not “years” in the context of when rate hikes would commence once APP is officially wound down.
10Y yields spiked immediately when retail sales hit:
Quickly rising to their highest since 2011:
As Luke noted first thing this morning, stocks were mad at real yields (again):
But seriously it's the damn mirror image again today pic.twitter.com/2S2YmjprsX
— Luke Kawa (@LJKawa) May 15, 2018
It was all downhill from there:
EM equities were crushed, in the worst day since March:
The dollar hit YTD highs:
Tough day for carefully-polished yellow doorstops, because, you know, reverse real yields play and all:
That’s a YTD low. Sorry tinfoil hat crowd – on the bright side, if it keeps falling, you’ll be able to afford to make your hats out of gold leaf, so at least there’s that.
The euro hit a new YTD low after more data disappointments and amid dollar strength:
The krona was funny today – remember how the Riksbank suggested a hike isn’t coming until December? Yeah, well Skingsley decided to tip October today and in a testament to just how sensitive EURSEK is to this, there was a rather dramatic knee-jerk:
Oil dove as the dollar and yields surged, but recovered as Iran fears linger after Treasury sanctioned Valiollah Seif.
Also on the geopolitical front, Kim is pissed again:
N. KOREA THREATENS TO CANCEL U.S. SUMMIT OVER DRILLS: YONHAP
— Walter White (@heisenbergrpt) May 15, 2018
The English language is not a sufficient tool to describe to you how much of a train wreck the lira has become amid Erodgan’s incessant rantings about rates. On Tuesday morning, on Bloomberg TV no less, he literally suggested that he’s going to commandeer the central bank. Needless to say, that sent the lira to fresh all-time lows.
Finally, for your moment of zen, State doesn’t seem to know anything about Kim canceling the Summit…
"We will continue to plan the meeting between President Trump and Kim Jong Un," State Dept. spokesperson Heather Nauert says amid reports that North Korea is threatening to pull out of summit with the U.S. https://t.co/4eUtpV7fbW pic.twitter.com/Fd2aAr8mKT
— CBS News (@CBSNews) May 15, 2018