There was a lot of weather price action in the Europe/US overnight. And a lot of explaining what was going on (does anyone really know? There wasn’t much in the way of specific catalysts, and individual markets seemed to move … errr … individually).
So, here’s some of what went on, maybe you’re better at piecing it together than me:
- Yesterday Chinese Premier Li said “you’re on your own”. I posted it here, just after the Chinese trade data: China Premier Li: says will not take short term stimulus measures to deal with short term volatility
Was this a/the catalyst? If it was … it took the market a LONG time to take it on board, didn’t it? Sure, it went into the mix, but … hmmm. And, the world’s favourite China proxy (Hi, aussie $) didn’t really do too much on the downside, merely retracing some if its day’s gains
OK, to the moves in NY:
- It seemed to be the NASDAQ as the driver, pulling down the Dow and the S&P – some saying profit-taking on internet and biotech stocks since they have had a great run
- There seemed to be a large asset allocation trade out of stocks into bonds, mostly conducted in 10-year futures. At about 11 a.m. (US eastern time) about 66,000 10-year futures contracts were bought in 2 minutes
- Then, following after 11, the total volume on the 10-year contract was in the neighborhood of 120,000. (if anyone would like to elaborate on these volumes, please do so)
There was good buying in 30-yr futures contracts
- Heavy short covering in 10-year cash and outright buying from real money and insurance companies
- As fixed interest moved higher, the price action fed on itself … momentum
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Someone mentioned in the comments earlier “Ex post rationalisations for market behaviour”. Well, there’s a few more …
Comments welcome (as always) …
