Did anyone catch the 15%ish flash crash in the US 30 Tbond this morning –from 6:12-6:23am? The 30yr yield spiked from 2.8 to 3.37% for a few minutes. Considering the 30yr duration and avg when issued yield of 2.75% that flash crash represented a 15%ish drop in price.
It looks like a stop-hunting algo went nuts taking out some stop-loss targets for 2 minutes (6:12-6:14am) until it came to a halt after reaching 3.37% –a yield not seen since September 2014.
Imagine how things would be different had you woke up to a headline saying the Dow plummeted 3700pts (15%) for a few minutes before you had your coffee this morning. Fear not. That can’t happen because there are self protection mechanisms in the futures market to stop equity indexes from dropping more than 7% in the after hours / pre hours session. The last time the self protection mechanism (some call it the plunge protection team at work) was tripped was the evening of the Nov 8 2016 election when it took less than 2 hours to drop 7% –until it was shut off. The S&P500 did the same thing –dropped 7% in less than 2 hours after it was announced Mr. Trump had won.
FYI, the time previous to that was the May 6 2010 flash crash when the Dow dropped 100pts per minute until it was shut off (after being down 1000pts), then jammed back up by central bank liquidity.
Interesting markets, these are.