Defensive Stocks Surge Ahead Of Payrolls As Entire Treasury Curve Is Now Inverted

An early cash market close today ahead of the Fourth, but that never stopped the algos from melting stocks up just a little further...

Chinese stocks were weak overnight but remain green on the week...

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European stocks soared, led by Italy (EU backing off debt fines), as perhaps the reality of uber-dove Lagarde hits home...

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Europe's bond markets went further into full retard mode with Italian yields collapsing and trading inside of UST 30Y yields (nope, no risk there)

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US equities surged again because why not...Nasdaq extending its winning ways, up 2.5% post-trade-truce...

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RECORD HIGHS for S&P, Dow, and Nasdaq

On the back of a major bid for defensives (5th day in a row)...

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Another nice big short-squeeze helped things once again...

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Every effort was made to ramp the S&P to 3,000 as VIX was monkey-hammered back to a 12 handle...

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Bonds and Stocks remain dramatically decoupled...

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Treasury yields slipped further on the day (except 2Y was unch)...

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10Y Yields hit a 1.93 handle overnight!!

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2s30s has erased all of the steepening post-FOMC...

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And this has pushed 10Y Yields back in line with S&P forward dividend yield expectations...

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And perhaps of most note, 30Y yields are now below the Fed Funds rate meaning the entire UST curve is now inverted...

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Probably nothing!

The dollar limped lower but remains higher on the week...

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Yuan went nowhere on the day but remains weaker against the dollar since the trade truce...

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Commodities were all marginally higher on the day but mixed on the week...

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WTI pushed up and test $57 early on then chopped around after the inventory data. This is the worst post-OPEC reaction since 2014...

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Gold leaked lower after its overnight spike but remained higher on the day...

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Gold and the dollar decoupled today...

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So to sum up - stocks are at record highs (led by a huge surge in defensives), bond yields are at cycle lows (inverted entirely across the curve and back in line with stock dividend yields), and bullion and bitcoin are bid - not exactly bullish eh?

It’s not often that the SPX hits a high with cyclical stocks down 13% from their peak. Good thing we have Utilities and Staples to rotate into. The sort of stuff you want to own in a downturn, the same one that most commodities and bond yields are telling you is around the corner
— David Rosenberg (@EconguyRosie) July 3, 2019

Finally, "you are here"...

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And in case you wondered, Goldman's proprietary indicators shows that "monetary policy" remains the main driver of risk appetite and expectations are now very bullish.

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