The disjointed price action of Friday carried over into Monday as asset classes moved contrary to their normal relationship. Equity came well off the session lows with big caps outperforming the small and mid caps whereas on Friday they underperformed.
Credit markets caught a bid bringing treasury futures closer to all time highs with the 10 year yield moving lower by 1bp to 2.03%. Treasury auctions once again hit near all time record bid to covers as investors continue to seek US debt the same day a new record monthly deficit was announced.
The commodity sector continues to reverse lower including the miners with Freeport McMoran (FCX) down 1.3% (38% off last year’s highs). Precious metals were not spared either. The divergence between the Dow and the transports continues to grow as the transports were 63bp weaker on the session. HYG was unchanged with very low volume.
The biggest move though was with the currencies, specifically the Aussie dollar both spot and future prices. This two day move lower in