“Everything Changed In 2011… What Comes Next Is Painful”: Deutsche
by Tyler Durden
ZeroHedge.com
Sat, 02/17/2018
To the markets, it has become more vexing than the volocaust. After all, last Monday’s violent move – which saw the VIX surge by the most on record and send the market into a sharp, brief correction – was not only predicted (if only by a handful) but the reasons behind the VIXplosion are largely understood, as inverse VIX ETFs experienced the equivalent of a terminal margin call, prompting the “largest VIX buy order in history.”
Meanwhile, Wall Street has been scratching its head to explain the recent, far more bizarre moves across asset classes – stocks, yields and the dollar – which first Citi, and then Deutsche Bank’s chief FX strategist, admitted made no sense.
As a reminder, here was Citi lashing out on Valentine’s Day at the concurrent plunge in bonds and the USD:
So somehow we have embraced the theme that was with us through January. On a day when inflation beats in the US (incidentally retail sales missed): stocks are up, yields are up and the USD lower does not add up.
Then on Friday, Deutsche Bank’s George Saravellos doubled down, while at least attempting an explanation:
We are well into 2018 and our feedback from recently attending the TradeTech FX conference in Miami is that the market is still struggling to understand or embrace dollar weakness. How can it be that US yields are rising sharply, yet the dollar is so weak at the same time? The answer is simple: the dollar is not going down despite higher yields but because of them. Higher yields mean lower bond prices and US bonds are lower because investors don’t want to buy them. This is an entirely different regime to previous years.
The Rest…HERE
