As we have been seeing with increasing intensity (as addresses in some detail yesterday), the market saw ES print a fresh record high overnight/this morning while at the same time the 10-year yield hit a fresh low of 2.49% as treasuries continue to rally. German Bunds are rallying, even while a 30 year bund auction today was technically uncovered and EVEN SPAIN is seeing their bonds hit record low yields of 2.87%- remember yields move opposite the price of bonds/treasuries.
In Germany's case, unemployment rose for the first time in six months. In Spain's case, loan creation has fallen off severely.
It's not just the Flight to Safety bonds though, Credit is not playing along as was shown both last week and yesterday and VIX is not playing along as we first got strong signals of 3C buying last week followed by VIX's refusal to move any lower, now it has been green 2-days in a row.
It seems like something has to give as this is a very bizzare market, but we have often seen this behaviour for short periods right at transitions in the market, we may be seeing one now as expected.
Just after ES printed a record high this morning, the Yen/$USD divergences seem to have kicked in and USD/JPY has taken a pretty big spill in pre-market, this has pulled ES futures off record highs and below yesterday's 4 p.m. print, or right about at it.
The ES v USD/JPY correlation is off again after reverting back to the mean earlier and USD/JPY looks to be rolling over after its period of loitering after breaking 2 strong support areas last week, looks to finally be ending.
Something has to give and with Index Futures negative across the Spectrum on timeframes and USD/JPY components negative across the timeframes, it looks to be a pretty easy guess as to which direction they resolve. Note the rounding USD/JPY.
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