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Yield Curve Crushed To 10 Year Lows As Stocks Signal Trump-Tax-Plan Won't Pass

The bond market's reaction to the Trump Tax Plan...

 

Bonds and Bullion were immediately bid and stocks and the dollar sank on the Trump Tax plan release - but as Europe closed, gold was 'managed' down, leaving bonds outperforming on the day... And stocks back to unchanged as the market realized there is little chance of this bill passing... (So Bonds price out a little more growth hope and stocks flat on status quo and Powell)

 

The immediate reaction in stocks to the release of the Trump Tax plan was disappointment - sending stocks lower and VIX higher - but that was quickly met by the machines crushing VIX back to a 9 handle...

 

And as it became clearer that this bill was a non-starter, stocks roared back...

 

Some of the bigger reactions to the Tax Bill were homebuilders...

 

And Private Equity shops (Apollo, KKR, KW)... though there did not appear to be anything in the tax bill

 

And TSLA kept falling (not helped by lower EV credits in the tax bill), tumbling back below $300...

 

Finally, Bank stocks outperformed the market... as the yield curve crashed...

 

High yield bonds did not love the tax plan...

 

Treasury yields were down across the board having fallen in the early European session then legged lower on the Trump Tax plan release...

 

10Y seems to bid in Europe...

 

With the 'growth'-related 5s30s curve slumping to new cycle lows...

 

Breaking down to new cycle lows - flattest since 2007...

 

The Dollar Index ended lower on the day but was whipsawed around quite a bit... like the other markets, FX seemed to signal no hope for the tax bill passing...

 

 

Crude rallied on the day but copper, silver, and gold ended unchanged after jumping on the tax plan...

 

 

The bottom line from the reaction by markets seems to be traders are not expecting this bill to pass at all... and bonds are signaling the recent reflation exuberance is now fading fast.