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).

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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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