Death Cross Formation

From Reuters:

Two-year Treasury yields at record low as stocks fall

Treasury yields fell across the curve, pushing through key resistance levels in the 10-year maturity, where yields passed below 3 percent, with traders citing a slide in Chinese stocks as a major trigger.

"If you look at the Chinese stock market, it looks particularly ugly, and China has a tendency to lead in the 'rest-of-the-world' category," said a trader in London.

Shanghai shares slid by over 4 percent as investors sold existing stocks to make room for Agricultural Bank of China's ABC.UL initial public offering.

In Europe the FTSEurofirst index of top European shares lost around 1.9 percent, with euro zone bank funding worries ahead of the repayment of 442 billion of European Central Bank emergency loans adding to concerns.

"A lot of (negative sentiment) is still emanating from concerns over Europe and the European banking system and the impact that might have if it rolls out globally," said David Page, economist at Investec.

The expiry of the ECB funding later this week has caused markets to adopt a cautious stance, wary of the effect that the large liquidity drain will have on the performance of peripheral euro zone debt.


U.S. stock futures also pointed to a lower open on Wall Street.

Traders reported strong cash buying from Asian investors in the two to five year sector of the curve, with Treasury futures volumes also high.

At 1000 GMT, 10-year Treasury futures were 16/32 higher at 122-41/64, the highest since mid April 2009.

Two-year yields were 0.6093 percent, having reached a record low of 0.594 percent earlier in the session. Ten-year yields fell below 3 percent for the first time in 14 months, and were last at 2.9652 percent -- nearly six bps lower on the day.


As stocks continue to grind their way down we are seeing increased interest in bonds. This renewed interest is pushing already poor yields to near record lows as investors seek "safety".

What will be most interesting to observe is the bond market's tolerance for high levels of sovereign debt amongst western democracies. At some point soon, I anticipate yields will rise, as investor doubts about the safety of government bonds grows. This will then be the point where investors pile into physical gold and gold stocks, in my view.

Some Death Crosses that have formed or are still forming:

Note that the SSE seems to lead other exchanges by about two to three months.

Crude oil is not in a happy state either with a death cross formation only a few days ago.

Let's see what Doctor Copper says, the metal with a PhD in economics:

Japan is in tough shape like every other stock exchange we looked at today: