Stocks Chop On Stimulus Slop, Bitcoin Jumps, Dollar Dumps

The algos were busy today… buying on every mention of the words “hope” or “optimism” and selling at technical resistance as once again nothing happened…

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Everything was red by the close with Nasdaq losing gains at the close. Small Caps and Trannies were worst on the day…

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Small Caps are the week’s biggest loser for now…

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Maybe it’s time to “not play” for a while… or is the FOMO just too strong?

But elsewhere in markets, there was lots of action.

The dollar dumped to its lowest since Sept 1st…

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Source: Bloomberg

The dollar weakness has helped send China’s yuan to its strongest since 2018 (against a broad basket of currencies)…

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Source: Bloomberg

And as the dollar dropped, Bitcoin popped, topping $12,900 – the highest since July 2019 (helped by reports that PayPal will integrate crypto)…

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Source: Bloomberg

Bitcoin had decoupled yesterday but today’s PayPal news sent the rest of the crypto space higher too…

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Source: Bloomberg

Treasury yields rose once again, led by the long-end (30Y +3bps)…

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Source: Bloomberg

This is the 5th day in a row that yields have risen, pushing 10Y above 80bps (NOTE most of the selling was in the Asia session)…

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Source: Bloomberg

…to its highest since June (NOTE these 5-day spikes have tended to reverse quickly)…

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Source: Bloomberg

Rates are seemingly rising in line with the odds of a Biden win in the election…

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Source: Bloomberg

And as the odds of a “blue wave” rise are steepening the yield curve…

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Source: Bloomberg

Notably, real yields are on the rise once again but gold has decoupled from its historical negative correlation…

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Source: Bloomberg

WTI tumbled back to $40 intraday after a bigger than expected gasoline build…

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As the dollar dropped, gold popped, with futs back above $1930…

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Silver futures pushed back above $25…

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Finally, we note that Greed is back…

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And as Goldman warns, so is fear as Vol remains significantly elevated after the election…

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Markets are currently not just pricing in an increase in volatility around Election Day, but also a sustained high-volatility environment thereafter – both in the post-election period and in the long run. Does that sound like an environment to be buying every dip at record highs?