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Stocks carve out new session lows 90 minutes before the bell, the Dow (DIA -1.9%) now off 300...

Stocks carve out new session lows 90 minutes before the bell, the Dow (DIA -1.9%) now off 300 points, but outperforming the S&P 500 (SPY -2.1%) and the Nasdaq 100 (QQQ -2.2%). Long-term Treasury yields have come off their peaks, but remain sharply higher, the 10-year at 2.43%. The 5-year (IEI, FIVZ, TBZ, VGIT) at 1.32% must be starting to look good to anyone who believes the Fed isn't hiking rates for another 2 years. The Dec 2015 Fed Funds futures contract is pricing in 100 bps of hikes between now and then.
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Comments (14)
  • steppppo
    , contributor
    Comments (237) | Send Message
     
    This bloodletting was long overdue.
    20 Jun 2013, 02:47 PM Reply Like
  • mickmars
    , contributor
    Comments (1322) | Send Message
     
    Que Hilsenrath "Tapering to be put off until later"
    20 Jun 2013, 02:56 PM Reply Like
  • Deney_Terrio
    , contributor
    Comments (244) | Send Message
     
    Ouch! Big tree fall hard... how many fingers am I holding up?
    20 Jun 2013, 03:18 PM Reply Like
  • PalmDesertRat
    , contributor
    Comments (3510) | Send Message
     
    the worse it gets the more likely the Fed will back down.
    20 Jun 2013, 03:19 PM Reply Like
  • James Sands
    , contributor
    Comments (2433) | Send Message
     
    So someone correct me if I am wrong on this. The bond markets are selling in anticipation that Fed policy will no longer support high bond prices through the previous purchasing programs?

     

    1) Hasn't this been pretty apparent that tapering was inevitably going to happen?

     

    2) Where are these outflows of bonds going?

     

    The stock market is getting hammered, bond prices are falling, do we assume real estate/cash is where inflows are occurring?

     

    Ultimately, inflation will be a driver for interest rates, and what happens to equities, bonds, and real estate if inflation picks up?

     

    To me it seems this is a random market gyration and that once it passes, the market will possibly trend back towards its positive bias.

     

    FedEx's results are some cause for concern too, although I would question their claims that Asia markets are using vessel shipping services versus express air freight to cut costs. We need to check up on DHL on this first.
    20 Jun 2013, 03:40 PM Reply Like
  • Ghosts of Kariela
    , contributor
    Comments (152) | Send Message
     
    Perhaps it's some leverage unwinding, that makes the most sense to me. I think the outflows are going to cash, I'm not sure where else they would be going. This turbulence will cut off soon enough as wall street unwinds a bit of leverage IMO.
    20 Jun 2013, 05:45 PM Reply Like
  • James Sands
    , contributor
    Comments (2433) | Send Message
     
    Thanks for the reply Ghosts,

     

    I would tend to agree.
    20 Jun 2013, 06:31 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    Don't underestimate how much the Japanese/BoJ are selling into the Treasury markets - they have huge reserves of them. I mentioned this possibility more than a month ago and latest data does show Japan as the largest foreign seller. China may also be a seller given their purported "crunch."
    20 Jun 2013, 03:42 PM Reply Like
  • Gosho
    , contributor
    Comments (59) | Send Message
     
    Are we preparing for the big sell-off in the last 10 minutes?
    20 Jun 2013, 03:43 PM Reply Like
  • Hiway
    , contributor
    Comments (11) | Send Message
     
    China.
    20 Jun 2013, 03:55 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4221) | Send Message
     
    I believe you are correct Sir.
    20 Jun 2013, 04:04 PM Reply Like
  • bbro
    , contributor
    Comments (10589) | Send Message
     
    Almost the 5%....did get my first buy signal...although it is considered
    a minor one...
    20 Jun 2013, 04:09 PM Reply Like
  • Manuel Blay
    , contributor
    Comments (340) | Send Message
     
    If the Transports break the June 5 lows (secondary reaction lows), a primary bear market will be signaled, as explained here:

     

    http://seekingalpha.co...

     

    The S&P and the Industrials already violated the June 5 lows today. .
    20 Jun 2013, 05:13 PM Reply Like
  • Seth Walters
    , contributor
    Comments (677) | Send Message
     
    I think part of this may be due to the Chinese liquidity crunch. Of course, since the liquidity crunch is a state policy, that may not mean that the fall in bonds is anywhere close to being over. Very interesting.
    21 Jun 2013, 03:45 AM Reply Like
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