Entering panic mode as you can see by the excerpts below the only thing left is a capitulation trade next week , which is indeed confirmed by astrology and will be followed by ECB rate cut swiftly early Oct. when wave 5 will come to an end. Just to make clear that is not the big turn scenario just the end of a bigger wave count. Followed by a 4 week rally max before another selling wave should bring new lows – that will be discussed as we go along ( actually I mentioned it plenty of times already).
30Y rates move more than three standard deviations this week – the greatest move since Black Monday (1987) – as it drops 55bps – hhmm – stability.
Uh… did a member of the status quo just tell the truth? “It is clear now that the Fed cannot bail equity markets out any more and any interest rate cuts by the ECB may not have much of an impact on markets” Cue panic?
As overnight hopes of global bailouts fade, the reality that the markets are on their own has started to sink in across every asset class but perhaps credit – the life-blood of everything we do economically – is hurting the most. Senior financials are 14bps wider at 317.5bps (record wides), Main is 11bps wider at 209bps, and XOver 36bps wider at 880bps. Yesterday saw sovereign selling focused in the majors but today it has spilled over into everyone else as commodity producers have maintained their relationship with oil and have snapped wider. While SovX is ‘only’ 11bps wider at 368bps, CEEMEA is 41bps wider at 390bps overtaking SovX for the first time since June back to its more ‘normal’ position cheap to Western Europe.