Late Day Equity Reversal

The equity markets had quite a day starting off better bid, getting hit most of the day and then by late afternoon, they recovered a lot of the days losses to finish just above unchanged on the day. When we look at the settlements the equities had a mixed day with the Nasdaq and Russel2k higher, the SP basically unchanged and the Dow down 84 points. The biggest losers were both Gold and Silver and we know the gold bugs don’t want to hear it, but if we go into a full blown recession, the yellow metal will get hit. We also saw better selling in the fixed income as the longer end continues to get pounded:

We had a new 2 Year auction yesterday and a 5Y auction today which saw very good indirect participation at 71% and a 1.2bp stop thru indicating solid demand. We have seen a lot of interest in the longer end ETF, the TLT which is putting in a decent divergence on these recent lows, continues to see money pour in:

The TLT is down about 10% on the year and as we have noted this will be the 3rd consecutive down year for bonds if they do indeed stay here over the next few months. However with equities seeming to top out, we wouldn’t be surprised if to see sideways to higher action here as this may be the bail in bonds everyone is looking for.