Capitulation To The Dark Side?
Last week on May 29th, NDX breached 100 DMA to the downside, so what was different about last Wednesday?
The USD was up vs JPY (greater than 0.05 JPY), and yet a large down day for US equities ensued.
Paraphrasing as Nattered in Chasing The Dragon? and Less Parking On The Eccles Dance Floor?...
Of late, the seeming relationship between the USD/JPY FX pair has been, (+/-) USD up, US markets up, JPY down, Nikkei down and vice versa for both; (-/+) USD down, US markets down, JPY up, Nikkei up.
Refer to the blue arrows on May 30th chart below for previous occurrences of this USD/JPY "inversion" on May 2nd and 17th.
In the case of May 2nd, the session on the 3rd saw USD down big vs JPY, and the market sent up a large candle, which failed to breech the previous market high at 7879. Subsequent, the commencement of a large downswing, capitulation?
On May 17th a large candle down, followed by more of the same and a roll down the hill, capitulation?
What do these larger scale (greater than 0.05 JPY) USD/JPY "inversion" days have In common? Each were followed by large downdrafts, and could be considered as turning days or pivot points in the current down stroke since April 24th.
More downside to come? Again, capitulation? In the case of May 30th, oh indeed, and how. To ascertain the gravity of capitulation, one need not look at the large red candles hung out by equities, bond yields or USD/JPY, just oil...
That's what we call "lighting" a candle. As noted in last Tuesday's post Swap Spreads Speak? ...
We keep banging on the same drum, from different angles, for a reason. Inverted ED, UST, swap rate curves and negative swap spreads are all humming the same thing in unison, with USD/JPY singing someone has a "yen" for many Washington's.
When certain parties, offshore and otherwise, can't get the GW's they need in the market, with no lender of last resort or backstop for them, they must resort to selling USD assets at any cost to order to obtain them. Witness the "dark side", and never underestimate the power of it...
More to come in More Swap Spreads Speak? Stay tuned, no flippin.
The USD was up vs JPY (greater than 0.05 JPY), and yet a large down day for US equities ensued.
Paraphrasing as Nattered in Chasing The Dragon? and Less Parking On The Eccles Dance Floor?...
Of late, the seeming relationship between the USD/JPY FX pair has been, (+/-) USD up, US markets up, JPY down, Nikkei down and vice versa for both; (-/+) USD down, US markets down, JPY up, Nikkei up.
Refer to the blue arrows on May 30th chart below for previous occurrences of this USD/JPY "inversion" on May 2nd and 17th.
On May 17th a large candle down, followed by more of the same and a roll down the hill, capitulation?
What do these larger scale (greater than 0.05 JPY) USD/JPY "inversion" days have In common? Each were followed by large downdrafts, and could be considered as turning days or pivot points in the current down stroke since April 24th.
More downside to come? Again, capitulation? In the case of May 30th, oh indeed, and how. To ascertain the gravity of capitulation, one need not look at the large red candles hung out by equities, bond yields or USD/JPY, just oil...
That's what we call "lighting" a candle. As noted in last Tuesday's post Swap Spreads Speak? ...
Between yesterday 05/28 and 06/03, the treasury is auctioning $355B in notes and bills varying in duration from 4 weeks to 7 years. With 3X bid to cover now common, $1T will be tied up in the process. Think liquidity McFly.And in our response to these comments...
@"B"isForBob "The bottom is in... I'll wait a bit longer. Maybe closer to the June inflection." May 10, 2019. 02:46 PM and May 13, 2019. 10:52 AMOur earlier comment on May 23rd...
Closer to June inflection (4th pivot UP) might provide some relief. I sense closer to June 3rd, perhaps.... TBD. In any event, as bonds and JPY/USD move, so the swap rates and spreads shall speak.Indeed, one should not underestimate the force...
We keep banging on the same drum, from different angles, for a reason. Inverted ED, UST, swap rate curves and negative swap spreads are all humming the same thing in unison, with USD/JPY singing someone has a "yen" for many Washington's.
When certain parties, offshore and otherwise, can't get the GW's they need in the market, with no lender of last resort or backstop for them, they must resort to selling USD assets at any cost to order to obtain them. Witness the "dark side", and never underestimate the power of it...
More to come in More Swap Spreads Speak? Stay tuned, no flippin.
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