Stock bloodbath

Stock bloodbath

Stocks got crushed today (10/10/18) and the sell off around the world continues. This is extremely risk off behavior in the equity market yet looking at typical risk FX pairs like AUD/USD, NZD/USD they both failed to make new lows. This is extremely surprising on a day us markets fall 3%+. There is also a gigantic speculative short (commercial LONG) position in these currencies (as well as yen and gbp).


Looking at the state of the bond market the front end of the US curve looks extremely attractive. A risk free 2.5%+ return looks juicy and the front end of the US curve falling with such a long spec dollar position could see a mean dollar reversal lower with yield spreads in the front end peaking, especially with currencies who are close to starting a rate hike cycle or are in the beginning stages of one. If you are long dollar be careful as this is not a one way trade and we may be seeing the highs in the dollar soon

submitted by /u/rah311

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