The bond markets are continuing to drive this weakness in risk asset markets here. Volatility is rising considerably across bond and equity markets though particularly in non US markets. The Sp500 and other US indexes still show as many technical signs of a continuation as opposed to any trend change move, for now. European markets have been the weakest link once again recently and having liquidated all euro and uk equities a 6 or so trading sessions ago Ive short term reentered on yesterday’s weakness across German and UK indexes playing a corrective bounce rather than expecting new highs from these indexes.
We are very fast approaching now a summer “sell off” window. Whether we pass through this window will be greatly driven by bond prices. The 30yr treasury over 3.6% would be a lead as Fitzpatrick points out below.
Without delay here the swiss and many other reports:
And here UB with a closer price look at some key mm assets. Id like to imagine they are correct on where we are in this cycle though i’m more inclined towards the “Swiss” cyclical roadmaps:
And here Fitzpatrick with his heavy bond analysis:
And here GS (One high conviction trade, they are not shouting to long equities here)
And her, lest we forget, a cyclical analysis of the commodities. The 2011 bear market continues for now but the asset class appears to be basing as rates have scored a trend change. On any mm weakness, strategically, the allocation needs review given the bond issue.
And here another tech view.
And here RB with their macro view:
It could be a long hot summer this. If we do see a step change in volatility its going to be very interesting how participants handle the issue in terms of risk management. Leverage levels and therefore global money supply could react very badly to a step change in volatility. That, if seen, will feed on itself.
All the best
Richard