AP Photo
Morning. The Seas are angry today my friends - $/Y touches 111 as the "Carry Trade" unwinds sharply. Back to the 2014 "Kuroda Surprise Levels - and the biggest weekly move since Lehman failed. Multiple Headwinds here (Concerns on BOJ going negative rates, Haven driving Yen higher, Slowdown concerns weakening $). S&P Futures are off 2%+ as Markets are shredded overseas. Shares in Swedish Banks off 5% as Riksbank cuts rates to a -50bp, stunning the street - While other Euro Banks are Crushed - SocGen off 13% on #s. DB is in freefall - Off 8% and nearing a test of the week's lows. The Periphery is in shambles, led by a 5%+ drop in Italy as PIGS Yields blow out. FTSE is hitting 3+ Year lows as Rio Headers warning on the environment and slashing Divvy plans have Miners getting smoked in London. Volumes are strong across the continent, with most exchanges trading 1.5x normal. In Asia, Fortunately Japanese markets were closed for Holiday, while Hong Kong's Hang Seng returned from the lunar New Year to play catch-up with a 3.9% drop. The KOSPI was hit for 3% as Asian currencies come unhinged and North Korea barks - Indian Papers declared it "Black Thursday" as they lose 3.5% - while stunning enough Aussie bucked the trend, closing on the day's highs up 1% as local earnings sparked covering.
Havens are on Fire. Gold + 3%+ as the World Gold Council talking heavy demand - while Sovereigns are leaping, with Germany's 10YY dropping 10bp to 14bp and rapidly approaching the zero bound - UK's 10-year gilt yield drops to record-low, Canada's 10YY drops to record lows under 1% - and the 10Y Treasury Yield is off 10bp to 1.55%. The $ is breaking down sharply as we await fresh Q&A for the Yellen, with Yen and Euro both leaping higher as "Carry Trade" shorts are unwound. The weaker $ is a tailwind for commodities, yet we see Copper nearing off 1% as global growth assumptions collapse. The US 3M5Y Yield Curve, a key proxy for growth assumptions, is falling apart sharply this AM, it has been cut almost in half in 2016 - massive headwinds for US Financials. Globally, Energy getting worked over as WTI drops another 4% and nearing multi-year intraday lows as we read about Refiners aggressively dumping contracts.
Ahead of us today, we get Weekly Jobless Claims at 8:30. At 10 Fed's Yellen to Appear Before Senate Banking Committee (Statement will be the same, but Q&A will be different around 10:30) - At 10:30 we get Natty gas Inventory data, while all Credit eyes will be on the $15B, 30Y auction at 1 as Rates collapse. At 5:30 tonight, The Aussie Central Bank Governor's Testimony to Parliament Committee commences. Down in Washington, at 9:30 the Senate votes on HR 644 which would permanently ban state and local taxes on Internet access, while at 10 the House considers HR 3442 which would require Treasury sec. to report to Congress on long-term debt reduction plan any time the country's borrowing authority limit is set to be breached; White House has threatened to veto bill. Treasury Sec. Jack Lew testifies before House Ways and Means on proposed FY17 budget at the same time.