The lucky number for the S&P500 was four, which after three aborted attempts to take out the January 15 all time high, finally succeeded on the fourth try materializing in a furious buying panic in Spoos in the last minutes of trading. However, in terms of catalyst, there was absolutely nothing to push the market to new highs: durable goods were a disappointment as we explained earlier (and led banks such as Barclays to further lower their GDP forecast for the year), while initial claims rose to the highest of the year. Which leaves only Yellen as the factor, although as can be seen on the chart below, one can just as easily say once US traders walked in today, the channel lift algo was activated, and with Spoos meandering all day in a straight line within the channel, finally burst through to highs with the closing print.
Of course, in a catalyst free world, it meant that something else was driving equities higher, and that something as usual was a carry funding pair, only today it was not so much the USDJPY as it was the AUDJPY shown below.
Not everyone bought it, however, with bonds trading in a tight range and closing at a lower yield once again, and now back to early 2013 levels. Then again, in the New Normal all that matters is the wealth effect, aka stocks. And what do bonds know anyway.
So with conflict in the Crimea, economic data continuing to deteriorate far beyond simply “weather”, emerging markets still unsettled and likely to get worse as the taper continues and the US current account deficit shrinking, and the Chinese economy set for a “volatile year” in its own words what can one say but… it’s all priced in.