There was something odd about today’s continuation rally in stocks: while risk properties skyrocketed, the VIX hardly moved. In truth the Vix is now roughly where it was on Monday, mainly overlooking the move in stocks.
However there was another more ominous move in today’s risk rally, which as we noted earlier, appears to have been mostly a massive brief capture, in fact the greatest two-day short squeeze in history …
… namely the persistent purchasing of safe houses such as Treasurys however more importantly, Expenses.
And so, one week after we reported that yields on many T-Bills through 3 months turned negative for the very first time considering that the financial crisis, today practically all Expenses developing around July had a negative yield.
Needless to say, a scramble for both cash-equivalents (i.e. Expenses) and stocks is rather unorthofox, and stimulated dispute amongst Wall Street desks what might lag it. One answer that emerged is that for those who did not trust today’s stock rally and wished to assign their funds somewhere else, yet in the absence of available physical gold as an outcome of the unprecedented scarcity described yesterday, the one place where investors could discover “money equivalent” securities was among the short T-Bill maturities.
If this theory is correct, it would mean that the pent up demand for physical gold is unprecedented and any freshly readily available precious metal will be rapidly purchased as soon as it is readily available, which in light of the unprecedented expansion in reserve bank balance sheets as essentially every state is now pursuing helicopter cash, is hardly that surprising.
ZeroHedge.com RSS feed.