BOJ YCC Hint Crushes Markets

The US Bond market was already under fire most of the trading day after the GDP and Durable goods numbers then the BOJ news! The Q2 GDP came in at 2.4% exp 2.0% and DG Orders were +4.7% exp 1.5%. This crushed the US equity markets and the ECB Hike coupled with the BOJ news that was leaked out put a quick lid on risk assets and the US dollar soared:

Japan's Nikkei reported that the Bank of Japan “will discuss tweaking its yield curve control policy at a policy board meeting Friday to let long-term interest rates rise beyond its cap of 0.5% by a certain degree”

This is not only an absurd way to convey market policy, but its very disruptive to overall participants abilities to stem risk, when you get tape bombs like this, the moves can be ferocious. Here is the Nikkei off this news:

We also saw continued waves of selling in the Nasdaq futures as the 15900 level was tested and held again. We posted this on our twitter at 12:40est and the market continued to drop from there:

There were big moves in the US bond markets today as well and the long end was hit hard and has put in a new yield high above the July 6th highs and well off the 3.642% low during the March bank bailouts:

As far as the US 2Y it held up relatively well considering the long end move:

The curve picture settled out with the front end a bit steeper with the belly of the curve taking the brunt of the selling pressure: