| | | DUEED is continuing inexorably towards the inevitable
Gold is not nominal-up, but certainly relative-up
And gold-holders are lucky for they have that to sell to cover margin-calls
zerohedge.com
Dow Futures Crash Near Limit-Down As Global Dollar Buying Panic Sparks AsiaPac FX Collapse
Update (2305ET): Dow futures losses have accelerated, plunging over 1000 points limit-down...
S&P and Nasdaq futures are also crashing...
Additionally, South Korea's KOSPI is halted after triggered circuit-breakers down 8% on the day...
Platinum and Palladium are plunging...
And Copper has succumbed to the liquidation...
* * *
The global scramble for dollars amid a massive shortage has rolled around the AsiaPac time-zone and is leaving a bloody trail across every asset-class.
FX is in freefall with Aussie collapsing at the fastest rate since Lehman...
Source: Bloomberg
Kiwi is back to its weakest since 2009...
Source: Bloomberg
Yen is tumbling once again...
Source: Bloomberg
Won is getting whacked...
Source: Bloomberg
And Aussie has crashed to its weakest against the offshore yuan everand weakest against onshore yuan since Dec 1993...
Source: Bloomberg
And overall, AsiaPac FX is crashing to its weakest against the USDollar since 2004...
Source: Bloomberg
And the liquidation continues in US equity markets with Dow futures down over 800 points, erasing the after ramp in stocks...
And losses in AsiaPac stocks are accelerating...down 27% from January highs
Source: Bloomberg
And JPY Basis-Swaps are signaling extreme dollar shortage continues...
Source: Bloomberg
This all has the smell of a massive global macro fund liquidation and the contagious impact of that leveraged unwind across the global risk markets.
As Bloomberg's Stephen Spratt details, desks continue to speak of the “sell everything” mentality in markets with huge liquidations and de-leveraging taking place everywhere.
The data stacks up. Looking at the three-day change in open interest across major June bond futures as of close of play Tuesday, the reduction in positions is the equivalent to $150 billion in 10-year cash Treasury bonds ($140m/dv01*). Here’s 3-day open interest change:
Schatz: -135,295
Bobl: -45,931
Bund: -178,221
Buxl: -17,566
OATs: -41,475
BTPs: -41,176
Gilts: -28,055
US 2y: -158,991
US 5y: -44,059
US 10y: -129,381
US 20y: -60,865
US 30y: -26,798
JGBs: -36,534
As one veteran Aussie trader exclaimed (who happened to be on the right side of the collapse in the currency):
"I love the smell of global macro fund liquidations in the morning..."
With currencies flash crashing across Asia on Thursday, central bankers may be looking back at the remedies used then.
As Bloomberg's Mike Wilson suggests, the tear the U.S. dollar was on back in 1985 was brought to an end when five central banks gathered in New York’s Plaza Hotel and came up with what became known as The Plaza Accord.
Source: Bloomberg
That sent the dollar into a steep slide that lasted until about the end of 1987.
With the Aussie, kiwi and won just free-falling, it looks like a similar sort of coordinated intervention may be needed to stop the dollar now, especially until the world is deemed free of coronavirus impacts. |
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