In a weird way, it is a good thing that stocks and bonds are moving in tandem
One of the characteristics of the market implosion over the past two weeks is that we saw a toxic combo of equities and bonds both selling off together.
The 'sell everything' mood among investors created a bit of a financial dislocation - which was particularly evident this week as European bonds were routed heavily - and that is why the phrase "no hiding place" or "no shelter" was common in the market.
Forced deleveraging and mass panic selling is something that can cause serious economic risks to businesses and households, which is arguably one of the key reasons why the ECB had to step in as it did with a bazooka on its back.
To their credit, that has helped to ease one area of the financial dislocation in the market this week i.e. falling bonds (rising bond yields) with falling equities.
And I would argue that this is one of the reasons why the market is able to keep a calmer footing so far towards the end of the week.
US futures are now approaching 3% gains on the day and looks to set up a positive day for European stocks - at least at the open - while bonds staying bid is also helping with the risk mood, as convoluted as that sounds.
The key question for the market is for how long can all of this last? That will be tough to say. In any case, I'd keep an eye on European bonds and the spreads there, but also on dollar funding pressures - which do not look to be gone just yet.
