For the second day in a row, a feeble attempt to lift risk assets overnight has fizzled dramatically, as what was a modest drop in yields has reversed completely, sending the 10Y TSY surging above 3.97% - reaching levels not seen since 2010 - and just shy of 4.00%, a critical level which will be crossed shortly...
... while across the pond, in an even more remarkable move, the 30Y Gilt soared another 50bps today (the second day in a row), pushing the yield above 5.00%...
... the highest level since 2002, and an increase which is simply stunning: the 30Y was trading at 1.0% at the start of the year... it is now 5%!
And with yields exploding, the dollar of course can't be far behind, and sure enough the BBDXY is back to record highs after a tentative - and now rejected - attempt to dip lower earlier...
... which of course means that the "market break" that Morgan Stanley warned about yesterday, is getting closer with every passing uptick in the USD.
... and since the market is well aware that for stocks to soar, they have to crash even more first, that's precisely what they are doing, with the VIX suddenly taking off and rising ab over 33 to a 3 month high...
... spoos have tumbled below 3,640, down almost 100 points from session highs, and below the June intraday lows meaning that stocks just hit the lowest level since November 2000, while the Nasdaq has made another grotesque reversal and after being more than 1% higher in earlier trading is now down more than 2%.
Tyler Durden
Tue, 09/27/2022 - 12:41
