By Tyler Durden at Zero Hedge
It has gotten beyond ridiculous: a few short hours ago the yield on the 10 Year bond tumbled to a fresh low of 2.49% (and currently just off the lows at 2.50%), wiping out all of yesterday’s “jump” on better than expected Durables and leading to renewed concerns about the terminal rate, deflation and how slow the US economy will truly grow. Amusingly, this happened just as US equity futures printed overnight highs. Doubly amusing: this also happened roughly at the same time as Spanish 10 Year yields dropped to a record low of 2.827%, or about 30 bps wider than the US (moments after Spain announced that loan creation in the country has once again resumed its downward trajectory and a tumble in retail deposits to levels not seen since 2008). Triply amusing: this also happened just about when Germany had yet another technically uncovered 30 Year Bund issuance, aka failed auction. So yes: nothing makes sense anymore which is precisely what one would expect in broken, rigged and centrally-planned markets (incidentally those scrambling to explain with events in bond world where one appears to buy bonds to hedge long equity exposure, are directed to the minute of the Japanese GPIF pension fund which announced it would buy junk-rated bonds to boost returns – good luck to Japanese pensioners).
Stocks in Europe initially opened higher following another strong performance on Wall Street which saw the E-Mini S&P futures hit yet another record high and the small-cap index Russell 2000 now outperforming the S&P 500 for the first time in over 2 months, with the Nikkei 225 up 0.2% during Asia-Pac trade. However, this move was consequently reversed following weakness in EM currencies (see below). The Italian MIB has outperformed throughout the session, being supported by Telecom Italia after their positive broker move at Goldman Sachs, which has consequently lifted the telecoms sector.
Turning to Asia, all major bourses across the region are trading firmer with the HSCEI (+1.3%) being the region’s best performer led by cyclicals. The sentiment is perhaps helped by a frontpage editorial in the China Securities Journal suggesting that the PBoC may continue with further “targeted easings” such as cuts to RRR for more banks, and bond purchases, in an effort to stabilise growth. Bloomberg is reporting that China’s State Council has recently approved plans for China Development Bank to issue securities at below-market rates to other state institutions which will allow CDB to better fund re-development projects….