The SPX index has closed within 0.22% for 6 straight days now. As CC mentioned yesterday in Quick Hits, that is the lowest 6 day realized volatility reading in the past 15 years of data. So while a few days ago I had written the price action off to summer doldrums, this has become quite abnormal. And not just related to the stock market. Every asset class (stocks, commodities, currencies) except bonds (which have actually made a big move lower in the past week) is in the bottom 10th percentile of its realized volatility over the past 5 years. In other words, nothing’s moving. And really, with such low volume, not much is trading.
As a result, not much to report overnight again (stocks, bonds, commodities, currencies, all very close to flat). One interesting divergence overnight was in Asia, as the Hang Seng and Shanghai ended the day lower again, while the Nikkei in Japan actually rallied almost 2%. Both indices have shown a strong correlation this year (between 60 and 70%), so rare to see that large a divergence.
What made me laugh when I read headlines this morning was that the strong up move in Japan was being attributed to comments by Chinese Premier Wen about more stimulus. The journalists need headlines, but they should have at least checked to see whether the Chinese market agreed about that reasoning. My first thought when I saw Japan up 2% was that the Japanese Yen had weakened about 1% in the past 24 hours (to a 1 month low), which might be viewed as aiding Japanese exporters. But even that’s a stretch.
Busy economic data this morning. Initial Jobless Claims, housing starts, and building permits at 8:30 am EDT, with Philly Fed at 10 am.