Yield Curve Collapses To 10 Year Lows, Stocks Stumble Amid “Unprecedented” Bullish Sentiment

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Bonds and Bullion are bid and the yield curve crashed as the Santa Claus rally fails to appear for a second day…

Gold’s gains are S&P’s losses as the two converge for the month of December…

For the second day in a row, stocks went nowhere despite the promise of the Santa Claus rally… (NOTE the somewhat ridicluous instaramp in the last 2 minutes to get stocks green)

Futures show the week so far better – Nasdaq (green), Dow (blue), S&P (red) (note AAPL was down again today, testing its 50DMA)…

Perhaps it is because, as Kevin Duffy noted earlier, “8 out of 10 of the best sentiment indicators are in the 99th percentile of bullishness over the past ten years (a period of mostly bull market optimism!).  This is unprecedented…”

FANG Stocks are down for the 6th day in a row… (the longest losing streak since Nov 4th 2016)

Banks have been under pressure this week…

VIX jumped somewhat notably today (3rd day up in a row) – NOTE the VIX hammering into the European close and then it snapped…

Despite a heavy tail in today’s 5Y auction, yields crashed across the curve and the yield curve flattened dramatically

Perhaps a few funds are seeing the ‘value’ in bonds?

Notably 10Y yields dropped back below 2.4% (YTD unch)…

Which is notable, as Strategas points out, a 12/31 close above 2.44% would be the 3rd year of rising rates in a row – the longest stretch since 1981

The yield curve crashed most since Brexit to a new cycle low…(lowest close since Oct 2007)

There is some serious problems brewing in Japanese liquidity markets as while Euro- and Sterling cross-currency swaps have bounced back, Yen-USD basis swaps have collapsed to a new cycle low suggesting major USD-funding issues for Japanese entities…

The Dollar Index slipped lower today…lowest close since Dec 5th

WTI was unable to extend yesterday’s gains above $60…

Gold and Bitcoin continued to recouple…

As Gold surged above its 100DMA for the first time in a month… (NOTE – gold suffered a death cross as the 50DMA crossed below the 200DMA)

Meanwhile copper is at near 4 year highs…

The question is – why are bond yields collapsing and not playing along…

Cryptos had a mixed day with Ripple ramping, but Ether, Bitcoin, and Litecoin all sliding…

Bitcoin futures volume picked up today but remains notably lower than last week…

As a fional notes, CFTC reports that net speculative positioning in CBOE Bitcoin Futs is -1371 contracts, or Short 6,855 Bitcoins… so prepare yourself for a short squeeze.

Bonus Chart: WTF!!