The Dow Streak May Be Finally Over, But In February Everything Was Up

Just because…

The Record Winning Streak Is Over…

They desperately tried to ramp it but failed

NOTE: Today was the worst day for Small Caps since October

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Banks, Bonds, Bullion, and Broad equity indices were all up in February…

So was VIX…a massive divergence for a month

Dow led the way this month with a 4th monthly gain in a row for stocks

Bonds were bid for the month with 2Y underperforming…

The USD Index closed the month lower…(Loonie weakest among the majors)

March rate-hike-odds have soared in the last few days from 37% to 54%…

But the Dollar isn’t buying it at all (and nor are bonds)… So WTF is going on in Fed Funds Futures?

ForexLive has some ideas…

There hasn’t been much in the way of economic news in the past few days. Durable goods orders and GDP were weak; consumer confidence was strong. Fed speak was repetitious. But Fed funds futures hike probabilities have shot to 54% from 37% since Thursday.

Why?

One idea is pure manipulation. A bank that wants to see a hike might be buying Fed funds futures to try and somehow manipulate the Fed’s thinking.

Or it could be some other kind of leak from the Fed?

Or maybe someone is just making a big bet it’s going to happen as they take a closer look at the data.

What’s curious is that the US dollar hasn’t gone along for the ride. That suggests it’s not fundamental.

While on the topic we note that 1 Year OIS topped 1.00% for the first time since Nov 2008…

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Mixed picture for today in bond-land with the long-end rallying and short-end dragged by the shift in FF futures… (Note the major flattening of the curve)

The US Treasury Curve has collapsed to its flattest since the election… but banks don’t care…

But stocks dropped and erased yesterday’s gains (before a desperate ramp into the close again)

Orrin Hatch comments at around 12ET that it’s “very difficult to change the current tax system because the Democrats are very uncooperative” seemed to spark the selling (and VIX buying). Of course that was ramped back above 20,800. Then again we saw selling pressure in the last 30 mins but once The Dow breached 20,800, a sudden buying panic resurfaced…

Target was monkeyhammered…but most retailers had an ugly day (SIG on sexual harrassment suits)

For the second day in a row, the dollar index rallied during the US day session after overnight weakness (and the Loonie was smashed lower)

WTI and RBOB ended the day lower but bounced back notably on OPEC cut compliance and White House ethanol mandate denials…

Gold topped $1250 and Silver topped $18 on the month…