Today's global trade reality.
In Blue -> Countries for which the US is the largest trading partner In Red -> Countries for which china is the largest trading partner (as measured by exports + imports)
The S&P 500 is down 15.3% in the first 66 trading days of 2025, the 4th worst start to a year in history.
Source: Charlie Bilello
Third consecutive close of the $VIX > 45.
That’s only happened in three bear cycles: 🔻 2008 🔻 2020 🔻 2025 Source: Alfonso De Pablos, CMT, Alfcharts
Do you remember LTCM???
According to a zerohedge article, the leverage on Treasury basis trades - which is by far the most popular trade among big hedge funds - is anywhere between 20x (Treasury Board Advisory Committee estimate) and 56x (Fed estimate); on a VaR basis LTCM was an amateur... Source: www.zerohedge.com
Holy cow...
Look at the Japanese 30Y 😨 Source: TXMC on X
The $VIX closed above 50 today which is in the top 1% of historical readings.
What has happened in the past following closes above 50? S&P 500 gains over the next 1, 2, 3, 4, 5 years every time with above-average returns overall. Source: Charlie Bilello
The vix (S&P 500 implied volatility) is now back above 50 (extreme fear).
The move index (30Y Treasuries implied volatility) is also skyrocketing... What's going on here? If volatility and market stress stay too high for too long, the risk of a financial accident is real. Source: TradingView
😨 What is the SOFR 3Y Swap spread trying to tell us???
➡️ The SOFR 3Y swap spread refers to the difference between the 3-year U.S. Treasury yield and the fixed leg of a 3-year SOFR interest rate swap. SOFR (Secured Overnight Financing Rate) is a benchmark interest rate based on overnight loans collateralized by U.S. Treasuries. It replaced LIBOR as the primary benchmark for U.S. dollar interest rate derivatives. 🔍 Why does it matter? 👉 A positive spread suggests higher credit/liquidity risk in the swap market relative to Treasuries. 👉 A negative spread can suggest technical factors, strong demand for Treasuries, or dislocations in the market. 🔴 Powell may pretend he doesn't need to get involved, but the market is about to force him doing so... Source: zerohedge
