Bursting Biotech Bubbles And Calendar Concerns Club Stocks/Bonds

Bursting Biotech Bubbles And Calendar Concerns Club Stocks/Bonds

Quad-witching only added to an extremely volatile week as the entire bond, stock, FX complex pumped and dumped on the basis of whether a “considerable period” was really six months and whether “quite some time” was more or less than six months. The S&P hit record highs early on this morning thanks to a ramp in AUDJPY (but once again bonds didn’t blink). All that ended when Europe closed and the Biotech sector’s weakness spread, leaving the Nasdaq -1.4% post-FOMC (and all other indices in the red post-FOMC). The range of moves in bonds, FX, commodities, and vol this week were impressive as we noted below…

Year-to-date, gold remains the winner (and HY credit the loser)…

Year-to-date, the Dow is back in the red and Russell outperforming…

To summarise this week’s carnage…

  • 2Y Yield +8bps – the worst week in 9 months
  • 5Y Yield +17bps – the worst week in 7 months
  • 30Y Yield unchanged
  • 5s30s -16bps – 2nd biggest flattening in 21 months
  • 2s10s unchanged
  • Silver -5.2% – the worst week in 6 months
  • Gold -3.3% – the worst week in 4 months
  • Copper ~unchanged (down 4 weeks in a row)
  • USD Index +0.83% – best week in 2 months
  • EUR -0.82% – broke 6-week win streak
  • VIX -2.8vols – 2nd biggest drop in 14 months
  • Nasdaq Biotech Index -2.8% – worst week in 5 months
  • Financials unchanged on the week

When the bottom fell out… as Europe closed…

Post-FOMC, all indices are now in the red…

With only financials holding any gains…

Bear in mind that financial stocks will rally into the capital announcements (as it has done for 3 years) but credit is weaker and not confirming this move at all…

Notably, “most shorted” names have been very weak since the FOMC – even as the broad market is pumped on the heels of financials…

On the week 30Y is practically unchanged while 5Y is +17bps!

FX markets were also volatile with EUR and JPY weakness (but AUD relatively outperforming)…

Gold has been limping higher thelast 2 days but on the week PMs remain under pressure with oil and copper around unch…

Charts: Bloomberg

Bonus Chart: The MoMos no likey Ms. Yellen…

Bonus Bonus Chart: Biotechs battered…by most in almost 3 years today

U.S. lawmakers have asked Gilead Sciences Inc to explain the $84,000 price tag of its new hepatitis C drug Sovaldi, which is encountering resistance from health insurers and state Medicaid programs – spraking concerns they may have a harder time pricing new medicines.

It seems like the government is basically going after externalities from yet another bubble sector likely bursting the bubble

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