Bond Yields, USD And Equities Down After Jobs Data
Matt Simpson | Jan 14, 2014 01:46AM ET
SUMMARY:
- Equites, Treasiries and USD sell-off post-NFP
- Gold continues to climb
- VIX rejects lows
- This signals uncertaintly in the markets as money flows into safe haven assets
Bond Yields have an inverted relationship with Bond prices - so when bond prices rise, yields will fall. Seeing as investors tend to buy bonds during times of uncertainty (and have less appetite for risk) the yields will fall, making it an excellent proxy for Risk-On and Risk-off...
Since NFP the release on Friday 5, 10 and 30-year treasury yields have all tumbled along with Stocks (another excellent barometer for risk) to further highlight the flight to safety.
Interestingly the 10-year Treasury note chart below looks very similar to USD/JPY which has also created a double top, whilst breaking beneath a rising channel line.
Gold meanwhile has been where the money flow has been going seeing the precious yellow metal
The VIX (Volatility Index) is often referred to as the 'fear index' and inversely correlates with risk. A low reading suggests market complacency and is usually witnessed during strong trends. High reading however is generally seen during times of market fear. As you can see the VIX has been resting on a 'complacency' support level for some time which raises the question "is this the beginning of a much larger move"?
If so, the implications are for a more bearish USD, Yields and Indices along with a bullish gold.
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