Liquidity Trap! 3M Treasury Yield At -0.025%

A liquidity trap is a situation in which, “after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt which yields so low a rate of interest.”

Well, Buckaroos, we are in a liquidity trap with the 3 month Treasury yield at -0.025%.

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A closer look at the T-bill market today.

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So here we sit in a classic liquidity trap!

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Fed Chair Jerome Powell in a liquidity trap!

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Mega thanks to Jesse at Jesse’s Cafe Americain for the jail jpg.

Frankly, I like The Byrds version of Buckaroobetter with the great Clarence White on the Fender Telecaster B-Bender guitar.

Sea of Red! Brent Crude Down 12.38% As Dow Closes Down 13% (Or 3,000 Points) Hedging Anyone??

We are in a Sea of Red.

Brent Crude is down 12.38% today while agriculture prices are down too.

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US, Europe and Asia are in red territory. With the Dow down 3,000 points or nearly 13%.

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It seems like a good time to hedge the stock market.

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A scene at your local grocery store.

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Virus Volatility! VIX, Gold, Oil, Europe, Emerging Markets (No Where To Run, No Where To Hide)

Volatility is spiking in virtually all asset classes.

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Even gold the most in over three decades.

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Wow. No where to run, no where to hide … from volatility. At least in terms of risky assets. Cash and Treasuries are the places to hide.

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Gold And Silver Clubbed As Investors Seek Safety With US Dollar

The coronavirus continues to scare investors as the death toll mounts. Sporting events cancelled, university classes going online, hoarding at grocery stores (although not in my neighborhood), etc.

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Seemingly, investors are dumping gold for US dollars. Who woulda thunk?

(Bloomberg) — As panic engulfs global financial markets, the dollar stands out as a haven.

Investors are betting on the greenback as the only safety net amid growing concerns about a liquidity crunch and a global recession. Even gold is losing its luster and the rush out of emerging-market debt has been swift and brutal.

“It’s shock after shock that’s now prompting people to liquidate even gold to make sure they’re keeping cash in pockets,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “Holding U.S. dollars as a safety buffer cannot be underestimated.”

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Gold is down again today but silver is getting blasted.

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Gold volatility is skyrocketing.

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Equities are on the rise with the prospect of more monetary and fiscal stimulus.

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Death and a consumer discussing why so much toilet paper is being hoarded.

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Another Trading Day, Another Trading Halt (NASDAQ Opens Down 7%, Europe Down 9%, Brazil Down 11.65%)

Another trading day, another trading halt as NASDSAQ opens down 7%.

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Europe is a sea of red as is Brazil.

Here are the circuit breakers thresholds and time durations:

Level 1 halt (7% decline in S&P 500 index)

  • Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
    At or after 3:25 p.m.—trading will continue, unless there is a Level 3 halt.

Level 2 halt (13% decline in S&P 500 index)

  • Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
    At or after 3:25 p.m.—trading will continue, unless there is a Level 3 halt.

Level 3 halt (20% decline in S&P 500 index)

  • At any time during the trading day—trading will halt for the remainder of the trading day.

Trading has resumed in America. As of 10am EST, Europe keeps crashing (down 10%).

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High yield CDX gets crushed!

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Gold is down 3.82%, silver is down 5.40% and Brent crude is down 6.43%.

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UPDATE:

Dow down >2,000. Eurozone stocks crushed like an oversteamed bratwurst!

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Get to the choppa!

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Gold Trading Hits Record High As Treasury 10 Yield Near All-time Low (Swaption Vol Escalates, Fannie’s 30Y Current Coupon Falls Below 2%)

Its a wonderful day in the financial neighborhood! … NOT!

Gold trading hits record high.

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As gold keeps on rising.

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S&P 500 futures are down 3.201%.

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USD Swaption vol is escalating.

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The US Treasury 10-year yield is down another 20 bps.

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Fannie Mae’s 30-year current coupon just fell below 2%.

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What up with that?

US Treasury 10Y Yield Plunges Below 1% As Dow Drops >900 Points

The glee over The Fed’s emergency rate cut of 50 points was short-lived.
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(Bloomberg) — Treasuries surged, driving 10-year yields below 1% for the first time ever, as traders bet the Federal Reserve’s emergency rate cut might not be enough to prevent the coronavirus from chilling the U.S. economy.
The rate on benchmark 10-year notes sank as much as 16.8 basis points to 0.9957%. Two-year yields declined up to 21.6 basis points to 0.6873%.
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Only Italy has 10-year point drops of more that 10 bps.
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The Dow dropped 953 points as of 2:15pm EST.
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Will The Fed continue cutting? Or should The Fed use salt?
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10 Days Later? Coronavirus Hysteria Only 7th Worst 1-Day Plunge Since 1987

No, the Coronavirus is not the same as the film “28 Days Later” where a virus turns people into flesh-munching zombies.

True, the one-day drop on February 27th was -11.7%.  But we don’t know yet what the return will be after 10 days. But if history is a guide, only the correction of 10/10/08 was followed with continued declines out to 90 days.

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So, while Coronavirus cases increasing, the morality rate is low. So far.

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There is not even a red-flashing warning from the Hindenburg Omen that “predicted” the 2008 stock market crash.

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The NYA is below its lower Bollinger Band indicating that a rally is forthcoming.

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Wow, that is one steep Elliott wave.

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And the Ichimoku cloud is far above the latest reading for the stock market, indicating a rebound is forthcoming.

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And we see a declining VIX index as Friday trading concluded.

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So, what will happen Monday morning or this coming week?

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Fear! Dow Down >800 Pts, Oil Down 4.5%, Gold Up 2%

Fear is roiling the markets on Monday.

Thus far, the Dow is down over 800 points.

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Global equity indices are seeing red.

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The 10-year Treasury yield is down over 10 basis points.

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WTI Crude is down 4.36%. Gold is up 1.88%.

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Fear is dominating the market!

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But one can do well on the corona fear with Proshares S&P500 short ETF!

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The Night Before: US Equities Down 1%, Oil Down 2%, Gold Up 1% (Coronavirus Fear Again)

It is the night before Monday opening.

And it is ugly.

The Dow Jones mini is down 346 points as of 7:30pm EST on Sunday evening.

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Bond market futures are up, meaning yields are down.

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Oil futures are down 2.55%.  And GOLD is up 1%!

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Yes, it is the coronavirus impact global supply chains.

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Or it was Tyson Fury licking Deontay Wilder’s neck in their rematch fight on Saturday night.

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