The writing has been on the wall for a few days/weeks, but it appears a combination of global FX and equity turmoil and domestic corporate debt market collapse is finally starting to roil US equity markets. The Dow is down over 600 points in the last week or so, bond yields are collapsing, the USDollar is tumbling, crude is crashing, and junk bonds are in free-fall.
As expected in the aftermath of the Third Avenue gating (and as previewed weeks and months ago) Junk debt is getting destroyed:
The Dollar is getting dumped:
But crude is still carnaging:
And traders are rushing into bonds for safety:
And bidding paper gold…
This won’t end well:
Remember, a 25bps rate-hike means up to $800bn of liquidity withdrawn from markets. That is starting to get “priced-in.”