Largest Intraday Market Swing in a Year, What’s Going On?

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by Mish Shedlock, The Street:

Both the stock market and bond market had huge intraday swings. Let’s investigate the likely cause as well as excuses.

The S&P 500 Swing

  • From 4652.94 to 4510.27 is a swing of 142.67 points.
  • In percentage terms, the top to bottom swing was about 3.1%

No only did stocks reverse today but so did bonds, especially at the long end of the curve.

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Intraday Bond Swing 30-Year

30-Year Intraday Bond Move 2021-12-01

30-Year Bond Swing Synopsis

  • The high today was 1.836%, up 5.6 basis points from yesterday.
  • The low today was 1.741%, down 3.9 basis points.
  • The yield is just off the low now at 1.745%.

Warning From Powell

Yesterday I commented Stocks Decline as Powell Warns of Higher Inflation and Accelerated QE Tapering

The stock market reaction is what I would have expected on the above news.

The bond market reaction is far more interesting. Yields at the long end tumbled and rose in the middle.

Given news that the fed would taper (end QE expansion) sooner and then start hiking rates sooner, one would have expected a stock market decline (and been correct).

But if the economy was strengthening, bond yields would normally go up across the board. They didn’t.

Something Bothering Mr. Market?

Michael Lebowitz asks the key question.

What’s Going On?

  1. Something is bothering Mr. Market. Omicron?
  2. Powell’s recent Hawkishness?
  3. Maybe extreme valuations are finally catching up with reality.

I strongly vote for door number three.

Anyone with an ounce of sense understands the market is immensely overvalued but the Greater Fool’s Game is enormous (thanks of course to the Fed and unwarranted stimulus).

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