|Tues, June 14, 16|
|[Stockboardasset] S&P futures -15bps|
|[Stockboardasset] Nikkei -129bps
The UK referendum is front and center trumping the upcoming FOMC meeting. The FED is at risk of becoming the boy who cried wolf as well as worthless forward guidance to steer markets is being depleted. Prior session markets were in tune to the four BREXIT polls putting the “leave” camp ahead sending GBPUSD to the low 1.41 handle and EURUSD to the low 1.12. FX volatility has spiked EVZ in a parabolic state in the past two sessions. EU equity and EU bank equity are in a sour state as monies are flowing into bunds crushing yields negative for the first time on record. This phenomenon of crashing treasury yields is a world wide problem from the UK, US, JPY, DET, and most DM countries. Overnight, USDJPY was smashed to the 105 handle as AUDJPY made new 2016 lows signaling overall health in Asia is lackluster. 10YR JGBs traded higher amid weakness in Nikkei with yields curves pressured all yields printing fresh lows. China/PBOC have to hold volatility tight for just the US cash session due to the decision on MSCI inclusion. Perhaps, the suppression of volatility in recent months is why Asia was calm. More CNY DEVAL in the overnight session by the PBOC has sent concerns to global markets, but Brexit trumps Asia so far. ASX200 was hit hard overnight -200bps. Around 230am US ET, the DXY started a trajectory to the high 94 handle advancing nearly 50bps. WTI is under pressure on the lower 48 handle with Copper printing low 2.03 handle. Return of volatility has certainty made an entrance, and we believe an era of volatility is upon us. SKEW tags 137 handle enabling 12% probability of SPX 2std DEV move. High beta/Low beta ratio is on the verge of the market transitioning to low beta. XLF, XLV, and XRT are sub 320sma.