• Why the rush into US Treasuries?

    Friday was an interesting day.

    At 12:00 AM, there was an announcement that Trump would impose his 10% Tarifs on 200B$ Chinese imports as soon as Monday.

    This was enough to pull the S&P500 down. What was interesting is to check at what happened next, but also before the announcement.

    First, we can see that large players did not buy weakness, but the cumulative shows a steady inflow of money that was enough to bounce the markets. My interpretation is simple here: the plunge protection team used freshly made available liquidity to smoothen the market's negative first reaction.



    On a longer-term view, the drop was not that heavy though, but the Cumulative Tick move tells us that the Fed wants to stay in close control even after such a small dip.



    It was also interesting to see that materials and financials attracted large sellers during the afternoon bounce. This tells us that these two sectors are probably the most in danger of overreacting to the tarifs.





    We can also see below that both the 10Y and the 20Y experienced a sharp influx of money on Friday.





    What is interesting to see though is that the influx started when the core bond trading started at around 8:00





    This tells us that lhose in charge of propping the markets higher had been forewarned.

    Strange enough, the AAPL's EV pattern was also displaying negativity as soon as markets opened.



    On a bigger picture, the US/German and the US/Japanese rates differentials continued pushing higher, indicating that money should continue moving into the US$ and US assets.





    Conclusions

    Propping US markets up is I believe a part of Trump's negotiation effort with China and the rest of the world.

    We should expect weakness on Monday, but the market's reaction will tell us more about the rest of the week.