Stocks Slump After Quad-Witch; Bonds, Bullion, And Bitcoin Jump

Without the quad-witch magic, stocks unable to hold gains as bonds, bullion, and bitcoin all see safe-haven bids...

Chinese stocks trod water largely overnight after a big week, with tech and small caps leading the drop...

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European stocks drifted lower for the 3rd day in a row, despite an excited open...

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Ugly day for Trannies and Small Caps, Dow managed to cling to gains but S&P and Nasdaq scrambled around lunch before a weak close (second in a row)...

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The (cash) opening spike at the open could not hold...

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Dow Industrials and Transports have notably decoupled...

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It's a serious decoupling...

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Notably, the decoupling of Small Caps and Trannies occurred when the ammo for short-squeezes ran out...

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VIX and Stocks remain decoupled...

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While the so-called Fed model "shows" that stocks are relatively attractive to bonds, Bloomberg's Ye Xie notes, the risk is that the equity market hasn't priced in enough potential bad news on earnings and the economy.

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In fact the last time equities and bonds decoupled this much did not end well...

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Notably, though, equity risk has entirely decoupled from the risk of bonds and bullion - some suggest this as a simple way to quantify the 'value' of the 'Fed Put' - around equity 25 vol points compression

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Treasury yields were down a pretty uniform 3-4bps or so across the curve...

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10Y dropped back to a 2.01% handle once again...

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And the yield curve flattened...now inverted for 22 days straight...

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Expectations for a big (50bps) rate-cut in July are surging (now 38%!)

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Before we leave bondland, this is worth noting - the US yield curve collapse has tracked the same move in the mid to late 1990s... all of which culminated with the collapse and bailout of LTCM (where leveraged bets on correlations exploded)

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