On a number of metrics, the "risk ON" trade entered "nosebleed" territory (a lot of inverted commas here). Sentiment indicators reached levels of bullishness last seen at three important points: April 2010, October 2007 and July 2007. Price action from the 30 November low is finishing a structure that needs to correct at least 2.5-3%.
This is a daily chart of the German DAX. Presented on the chart is the most bearish scenario, which I weight at around 50% probability.
This is a daily chart of the US two-year note future, which suggests that rates are likely to fall in the next few weeks (prices higher).
This is a daily chart of the German two-year schatz future, which also suggests that rates will fall in the short-term.
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