European Market Closed Up-Credit and Rates, Not as Happy

Since Draghi gave his "Everything to save the Euro" speeches, it's almost as if the market totally forgot that when it came time to act on those words, Draghi took a pass. I say, "almost" above because I find it interesting that the day after the ECB punted last week, it seemed GS had Euros and quite possibly stocks to sell (being they pretty much move together) and GS, the company that trades against their own clients, came out and gave us all free trading advice and told us to buy the Euro; to me that sounds like GS has some Euro's to sell after Draghi's sharp words were met with a wet blanket and the F_O_M_C didn't do much the same week.

Can GS sell a large position in a day? No, it would likely take several days and they aren't selling in to weakness, they are only selling in to price strength and demand as that is the Wall Street way.

So maybe that explains in part why the much better informed bond and credit markets are not as enthusiastic as the much less informed equity markets, as they say, "Credit leads, equities follow" and on that note...

European Equity markets higher, Credit dislocated and headed lower.

In fact, from our own Risk Asset layout, take a look at the very liquid High Yield Corporate Credit vs the SPX..

 On an intraday basis, HY Corp. Credit is trading below yesterday's close as it comes dislocated from the SPX, this has traditionally been one of the better leading indicators when it diverges from the SPX, but this didn't just start today, it just got worse today.

Since July 31, HY Corp. Credit hasn't made a single higher high while the SPX has made lots of them, yet today's divergence still stands out on this chart.

Even though the Australian Central bank didn't move rates last night, take a look at $AUD, one of my favorite currencies as a leading indicator for the stock market...

That's the first real negative divergence between the two that I can remember in at least weeks, maybe more.

We'll see how some of these indicators end the day, but HYG and the $AUD dislocated as well as European Credit vs equities, it smells like change is in the air.