Equities Fumble As Broke Banks Mounting

Thursday, July 5, 2012
By Paul Martin

by Tyler Durden

Volumes were not that far below average today as the Dow and the S&P (but not the miraculous NASDAAPL -not that story again please!) ended the day lower after some significant intraday volatility early (around the ECB/BoE decisions and jobs/ISM data in the US). S&P 500 e-mini futures levitated off the day’s early lows to stabilize around VWAP before testing up to unchanged and then losing it all into the close on heavy volume and larger average trade size. Financials were the biggest losers, as the big banks dumped off most of their EU-Summit gains(with JPM and MS down over 4% today), followed closely by Energy names – even with WTI basically treading water close to close (despite some +/-2% swings early on). USD strength saw Silver lagging on the day and gold dropped a little but rather notably since the EU-Summit, gold and the S&P have been trading more in lockstep (with Treasuries and the USD pointing to more risk-off perspectives). Elsewhere in commodity-land, corn continues its upsurge – now up 40% in the last 3 weeks.After falling off the 1.25 cliff as Draghi disappointed, EURUSD tracked sideways just under 1.2400 for the rest of the day; carry FX pairs tended to drift lower most of the day but the afternoon was quiet. Treasuries limped a little higher in yield into the close – led by the long-end – but ended the day down a few bps from Tuesday’s close (with 7/10Y outperforming). Treasuries are unch from the last NFP report (as is EURUSD) while ES is 55pts higher – hhmm.VIX ended the day up almost 1 vol accelerating above 17.5% as futures dived after-hours and cross-asset class correlation remained relatively low today – though ES traded with CONTEXT – as Europe’s tensions were once again shrugged off once it had closed and then remembered into the US close.

Gold and Stocks seem joined at the hip here post EU-Summit as Treasuries and the USD (strength) say something different…


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