Treasuries Flash An “Ominous Sign” As Stocks Surge

With both the Dow, and the broader market saved – for now – from an embarrassing Quad Witch slump by news that Boeing is set to roll out a software upgrade for its 737 MAX airplanes (how a software update will fix what many now see as a hardware issue is unclear, nor is it clear how Boeing effectively admitting guilt for the death of hundreds of people which will unleash billions in lawsuits is bullish), bond yields will have none of it and as we showed earlier, the buying ramp across asset classes is the latest confirmation that equities are not trading on fundamentals (as bonds price in the continued deterioration in the US economy), but merely frontrunning QE4.

That trade got a boost today after industrial production for February disappointed consensus at 0.1% MoM vs. 0.4% survey and -0.4% in January. Meanwhile, manufacturing production contracted for the second straight month despite forecasts of slight expansion, declining -0.4% MoM. This brings capacity utilization back to its lowest level since last July, having declined three straight months (and four of the last five).

The data comes on the back of another miss in the form of Empire manufacturing for March, which disappointed at 3.7 vs. 10.0 survey and 8.8 prior, which to BMO portends “potential weakening more broadly in the manufacturing sector through Q1 despite the loosening of financial conditions that has occurred since December.” All in all, as BMO’s rate strategist Jon Hill noted “a variety of disappointing releases which will continue to push yields lower.”

And speaking bizarre moves during “Freaky Friday”, shortly after the data was released, and the resultant tumble in yield, 3- and 5-year yields inverted modestly vs. fed funds, which according to Hill, was “a self-evident ominous sign.”

The last time 3s and 5s dipped below the Fed Funds was at the start of the year, when the VIX soared and equities tumbled. The big difference now is that not only is the VIX plunging, but the S&P is now rapidly approaching the all time highs hit last September.

Finally, and the latest divergence observed today between risk free assets and safe havens is that today’s 10-year yields tumbled to the lowest levels since the beginning of the year, with the post-CPI intraday bottom now breached.

In short: just as another BMO strategist, the bank’s chartiest Russ Visch noted on Wednesday, “the bond market certainly hasn’t been buying into this week’s strength in equity markets either. The divergence between the S&P 500 and the U.S. 2-year yield (which have traded in lockstep for many months now) is only getting worse.”

His question, and perhaps the only question that matters “Who has it wrong here? Bonds or equities?

The answer will determine what happens after today’s quad witch is over.

Treasuries Flash An “Ominous Sign” As Stocks Surge <body> <h1> Array ( [0] => rreasuries flash an &#8220;ominous sign&#8221; as stocks surge [1] => freasuries flash an &#8220;ominous sign&#8221; as stocks surge [2] => greasuries flash an &#8220;ominous sign&#8221; as stocks surge [3] => yreasuries flash an &#8220;ominous sign&#8221; as stocks surge [4] => 6reasuries flash an &#8220;ominous sign&#8221; as stocks surge [5] => 5reasuries flash an &#8220;ominous sign&#8221; as stocks surge [6] => teeasuries flash an &#8220;ominous sign&#8221; as stocks surge [7] => tdeasuries flash an &#8220;ominous sign&#8221; as stocks surge [8] => tfeasuries flash an &#8220;ominous sign&#8221; as stocks surge [9] => tteasuries flash an &#8220;ominous sign&#8221; as stocks surge [10] => t5easuries flash an &#8220;ominous sign&#8221; as stocks surge [11] => t4easuries flash an &#8220;ominous sign&#8221; as stocks surge [12] => trwasuries flash an &#8220;ominous sign&#8221; as stocks surge [13] => trsasuries flash an &#8220;ominous sign&#8221; 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as stocks surge [174] => treasuries flash an &#8220;ominous sign&#8211; as stocks surge [175] => treasuries flash an &#8220;ominous sign&#82q1; as stocks surge [176] => treasuries flash an &#8220;ominous sign&#82w1; as stocks surge [177] => treasuries flash an &#8220;ominous sign&#8231; as stocks surge [178] => treasuries flash an &#8220;ominous sign&#8222; as stocks surge [179] => treasuries flash an &#8220;ominous sign&#822q; as stocks surge [180] => treasuries flash an &#8220;ominous sign&#8221; zs stocks surge [181] => treasuries flash an &#8220;ominous sign&#8221; ss stocks surge [182] => treasuries flash an &#8220;ominous sign&#8221; ws stocks surge [183] => treasuries flash an &#8220;ominous sign&#8221; qs stocks surge [184] => treasuries flash an &#8220;ominous sign&#8221; aa stocks surge [185] => treasuries flash an &#8220;ominous sign&#8221; az stocks surge [186] => treasuries flash an &#8220;ominous sign&#8221; ax stocks surge [187] => treasuries flash an &#8220;ominous sign&#8221; ad stocks surge [188] => treasuries flash an &#8220;ominous sign&#8221; ae stocks surge [189] => treasuries flash an &#8220;ominous sign&#8221; aw stocks surge [190] => treasuries flash an &#8220;ominous sign&#8221; as atocks surge [191] => treasuries flash an &#8220;ominous sign&#8221; as ztocks surge [192] => treasuries flash an &#8220;ominous sign&#8221; as xtocks surge [193] => treasuries flash an &#8220;ominous sign&#8221; as dtocks surge [194] => treasuries flash an &#8220;ominous sign&#8221; as etocks surge [195] => treasuries flash an &#8220;ominous sign&#8221; as wtocks surge [196] => treasuries flash an &#8220;ominous sign&#8221; as srocks surge [197] => treasuries flash an &#8220;ominous sign&#8221; as sfocks surge [198] => treasuries flash an &#8220;ominous sign&#8221; as sgocks surge [199] => treasuries flash an &#8220;ominous sign&#8221; as syocks surge [200] => treasuries flash an &#8220;ominous sign&#8221; as s6ocks surge [201] => treasuries flash an &#8220;ominous sign&#8221; as s5ocks surge [202] => treasuries flash an &#8220;ominous sign&#8221; as sticks surge [203] => treasuries flash an &#8220;ominous sign&#8221; as stkcks surge [204] => treasuries flash an &#8220;ominous sign&#8221; as stlcks surge [205] => treasuries flash an &#8220;ominous sign&#8221; as stpcks surge [206] => treasuries flash an &#8220;ominous sign&#8221; as st0cks surge [207] => treasuries flash an &#8220;ominous sign&#8221; as st9cks surge [208] => treasuries flash an &#8220;ominous sign&#8221; as stoxks surge [209] => treasuries flash an &#8220;ominous sign&#8221; as stovks surge [210] => treasuries flash an &#8220;ominous sign&#8221; as stofks surge [211] => treasuries flash an &#8220;ominous sign&#8221; as stodks surge [212] => treasuries flash an &#8220;ominous sign&#8221; as stocjs surge [213] => treasuries flash an &#8220;ominous sign&#8221; as stocms surge [214] => treasuries flash an &#8220;ominous sign&#8221; as stocls surge [215] => treasuries flash an &#8220;ominous sign&#8221; 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as stocks syrge [230] => treasuries flash an &#8220;ominous sign&#8221; as stocks shrge [231] => treasuries flash an &#8220;ominous sign&#8221; as stocks sjrge [232] => treasuries flash an &#8220;ominous sign&#8221; as stocks sirge [233] => treasuries flash an &#8220;ominous sign&#8221; as stocks s8rge [234] => treasuries flash an &#8220;ominous sign&#8221; as stocks s7rge [235] => treasuries flash an &#8220;ominous sign&#8221; as stocks suege [236] => treasuries flash an &#8220;ominous sign&#8221; as stocks sudge [237] => treasuries flash an &#8220;ominous sign&#8221; as stocks sufge [238] => treasuries flash an &#8220;ominous sign&#8221; as stocks sutge [239] => treasuries flash an &#8220;ominous sign&#8221; as stocks su5ge [240] => treasuries flash an &#8220;ominous sign&#8221; as stocks su4ge [241] => treasuries flash an &#8220;ominous sign&#8221; as stocks surfe [242] => treasuries flash an &#8220;ominous sign&#8221; as stocks surve [243] => treasuries flash an &#8220;ominous sign&#8221; as stocks surbe [244] => treasuries flash an &#8220;ominous sign&#8221; as stocks surhe [245] => treasuries flash an &#8220;ominous sign&#8221; as stocks surye [246] => treasuries flash an &#8220;ominous sign&#8221; as stocks surte [247] => treasuries flash an &#8220;ominous sign&#8221; as stocks surgw [248] => treasuries flash an &#8220;ominous sign&#8221; as stocks surgs [249] => treasuries flash an &#8220;ominous sign&#8221; as stocks surgd [250] => treasuries flash an &#8220;ominous sign&#8221; as stocks surgr [251] => treasuries flash an &#8220;ominous sign&#8221; as stocks surg4 [252] => treasuries flash an &#8220;ominous sign&#8221; as stocks surg3 ) </h1> </body>