Gold Suffers Worst Week In 3 Years As Fed Balance Sheet Explodes
Remember, this is ‘Not’ QE…
The Fed has expanded its balance sheet for 10 straight weeks (by almost $280 billion) – the biggest such expansion since April 2013, the peak of QE3…
Source: Bloomberg
Since The started ‘NotQE’ POMO…
Stocks haven’t had a down week…
Source: Bloomberg
And that explosion in liquidity means fun-durr-mentals collapsing just don’t matter…
Source: Bloomberg
Or maybe there’s another reason (stocks have soared non-stop as Warren’s odds of getting the nomination have tumbled)…
Source: Bloomberg
All of which made us think…
[youtube https://www.youtube.com/watch?v=mXmNpdYpfnk]
* * *
Chinese stocks ended the week green but the late Friday session saw notable selling pressure…
Source: Bloomberg
European markets were also higher with a notable divergence between Spain/UK and France/Germany/Italy…
Source: Bloomberg
Most notably, European stocks are broadly back near their record highs…
Source: Bloomberg
US equity markets were higher on the week, led by a major move in Trannies all on the back of trade-deal optimism…
It seems, despite Trump’s statement that he hasn’t agreed to rollback tariffs, the market prefers to believe China/Kudlow over Trump/Navarro…
However, optimism for a US-China trade deal seem to have stalled the last few days…
Source: Bloomberg
Rather more notably, despite massive intraday squeezes, “most shorted” stocks fell for the second week in a row…
Source: Bloomberg
Momentum had another ugly week (down 5 weeks in a row and this was the worst week since the September momo massacre)…
Source: Bloomberg
VIX tumbled for the 6th week in a row (longest streak since Feb 2019) barely holding above an 11 handle…
And as VIX tumbled, specs piled in to a new record short position…
Source: Bloomberg
Bond yields have tracked Cyclicals/Defensive Stocks almost perfectly…
Source: Bloomberg
Bonds were a bloodbath this week with Treasury yields blowing out around 20bps (short-end outperformed)…
Source: Bloomberg
Pushing the longer-end of the curve to 3-month highs…
Source: Bloomberg
The yield curve exploded this week: 3m10y curve steepened for 5 straight weeks but 2y10y biggest weekly steepening since Feb 2018…
Source: Bloomberg
Rates markets are now pricing in less than one rate-cut by the end of 2020…
Source: Bloomberg
German bond yields have also soared, back near their highest of the year…
Source: Bloomberg
As European issuance has broken the full-year issuance record with more than seven weeks to spare, after borrowers including Apple Inc., Bayer AG and the People’s Republic of China piled in to the market this week.
Source: Bloomberg
And Japanese bond yields saw the biggest weekly rise since 2013…
Source: Bloomberg
The dollar soared by the most since August 2018 this week…
Source: Bloomberg
Offshore Yuan rallied for the sixth straight week (longest run sine 2018), but trade-deal optimism gains rolled over in the last 24 hours…
Source: Bloomberg
Cryptos had a tough week, tumbling in the last 48 hours…
Source: Bloomberg
Bitcoin broke back below $9,000…
Source: Bloomberg
Commodities were extremely mixed this week with PMs pummeled and crude and copper bid…
Source: Bloomberg
WTI ended back above $57, but could not top $58 at the upper edge of its medium-term range…
Source: Bloomberg
This was Gold’s worst week since Nov 2016 (Trump Election)…
…and Silver’s worst week since Oct 2016…
Despite gold’s tumble on the week, silver was considerably worse, driving the gold/silver ratio to its highest since mid August…
Source: Bloomberg
Gold also tumbled against yuan, back to its lowest since early August…
Source: Bloomberg
And as global negative-yielding debt drops below $12 trillion, one wonders if gold has further to fall…
Source: Bloomberg
Finally, here a few scary things for melt-up fans to watch…
The surge in yields – we note that despite all the excitement about bond yields rising, signaling to some that growth is back and everything with record high stocks is awesome again, the last two times that rates accelerate at this pace, things did not end well for stocks…
Source: Bloomberg
Additionally, the steepness of VIX term structure is extreme – a level at which stocks have generally stalled in the past two years…
Source: Bloomberg
And investors are at an “Extreme Greed” level of complacency across multiple asset classes…
And then there’s this…
Enough’s enough.
Fresh 50-year low in the commodities-to-equities ratio.
The next monetary & fiscal experiment will come at a cost.
Major cyclical turn in this ratio likely ahead. pic.twitter.com/gIKtpdp1KB
— Otavio (Tavi) Costa (@TaviCosta) November 8, 2019
Tyler Durden
Fri, 11/08/2019 – 16:00
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