U.S. equities are catching down to bond yields
U.S. equities are catching down to bond yields as investors unwind their past optimism on trade and growth momentum amid evidence to the contrary this week and Treasury curve inversion takes its toll on sentiment. European bourses led the rout early after missing a beat on German and Eurozone PMIs. The German DAX is 1.3% lower, Euro Stoxx 50 -1.6% and UK FTSE 100 -2%, with the added weight of Brexit delay. The major U.S. indices are 1.2-2.0% lower, led by NASDAQ. Though top U.S. negotiators head to China next week, Trump vowed to keep tariffs on while awaiting compliance from China. This followed the Fed's dovish dots and new schedule for ending balance sheet wind down. Nike tanked 5.5% after missing on sales guidance and Boeing slumped another 2% after Garuda airlines of Indonesia canceled a $6 B order for its ill-fated 737 Max aircraft. Within the Dow, Nike -5.5%, DowDuPont -3.7% and CAT -3.3% are biggest losers, while Coca-Cola +1%, Verizon 0.9% and McDonald's are weakest. Meanwhile, VIX equity vol has surged 21% to 16.56 compared to March lows of 12.37 and WTI crude is 2.6% lower near $58.40 bbl. Treasury yields are 10-11 basis points lower along the curve.