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US Futures Crash Limit-Down, Bonds & Bullion Bid

March 22, 2020

US Futures Crash Limit-Down, Bonds & Bullion Bid

Amid the usual last minute negotiations in Washington, spread markets suggested an ugly open for futures but FX trading in Asia was relatively subdued for once.

But, for now, no Congress agreement on stimulus means a lack of bids, so the US equity futures contract are limit-down 5%. 

Dow futures opened down 950 points… limit-down…

ECB Mulls Revisiting its QE Limits

S&P Futs trade limit-down at 2,174 (when Cash opens: 7% 2128, 13% 1989.50, 20% 1828.50)…

Gold popped back above $1500…

Treasuries are bid, extending their yield collapse from Friday…

10Y Kiwi paper yields crashed after RBNZ announced an emergency QE…

WTI has plunged to a $20 handle…

All a big  replay – perhaps – of the failed TARP vote from 2008…

The short gamma clearout via quad witching would help calm markets, they said.

Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar After Historic Fed Panic

March 15, 2020

Fed Disaster: S&P Futures Crash, Halted Limit Down; Gold, Treasuries Soar After Historic Fed Panic

The Fed may have a very big problem on its hands.

After firing the biggest emergency “shock and awe” bazooka in Fed history, one which was meant to restore not just partial but full normalcy to asset and funding markets, Emini futures are not only not higher, but tumbling by the -5% limit down at the start of trading…

… Dow futures down 1,000 and also limit down…

Mishkin Says the Idea That Fed Solves Everything With Rate Cuts Is ‘Wacky’

… the VIX surging 14%….

… perhaps because the Fed has not only tipped its hand that something is very wrong by simply waiting an additional three days until the March 18 FOMC, but that it can do nothing more to fix the underlying problem, while gold is surging over 3% following today’s dollar devastation (if only until risk parity funds resume their wholesale liquidation at some point this evening)…

… as US Treasury futures soar (which will also likely be puked shortly once macro funds are hit again on their basis trades), as it now appears that the Fed’s emergency rate cut to 0% coupled with a $700BN QE is seen as note enough by a market which is now openly freaking out that the Fed is out of ammo and has not done enough.

In short, with the ES plunging limit down, this has been an absolutely catastrophic response to the Fed’s bazooka; expect negative interest rates across the curve momentarily.

As FX strategist Viraj Patel puts it, “the Fed has thrown a kitchen sink of policy measures that should in theory weaken the US dollar. Problem is the global backdrop due to Covid-19 isn’t conducive to putting money to work in other countries/FX. Fed making US risky assets relatively more attractive may support $USD”

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