Well this is interesting… and strange. Very strange. Did I expect a rally? Yes. Did I expect it to be this quick and this strong? No.
Global equity markets have virtually shrugged off any worry associated with the Brexit. By looking at the S&P and the FTSE100, you’d assume nothing happened at all.
But it looks like this rally forgot to bring something with it.
It’s not just Barclays. All other EU banks including the infamous DB (pictured below) is still hovering near the lows.
USDJPY also hasn’t recovered from its Brexit tumble.
Meanwhile in the land of the insane, the Irish 10 year yield hit a record low. Just 5 fookin’ years ago these guys were on the verge of selling their children into slavery to pay off their debts but now somehow they can borrow at 0.603%.
And it’s not just Ireland. Around the globe sovereign bond yields continue to rally. Just this morning the US 30 yr was just 3 bps away from a new record low. Something is going on. I don’t know what, but this bright brown cocktail of risk off and risk on signals tastes funny.
Yesterday I expected that if there was a rally that EU banks would be some of the best performers. The fact that the opposite is true leads me to believe this rally is a bunch of bollocks. #BankHealthMatters folks! And compressed yield curves only intensify the pressure these banks are feeling. This is a rally to sell.