Despite a very explicit warning  by Goldman’s co-head of equity trading that the “regime has changed” and that instead of “buying the dip”, investors should be “selling-the-rip”, so far this morning a global BTFD relief rally from Asia to Europe has welcomed a rare respite from volatility as U.S. stock futures surged after a week that saw two of the biggest single-day percentage drops in seven years, with the Dow set to open some 300 points higher after Friday’s torrid last hour surge.

And as investors await today’s revised monthly budget statement, one which reportedly will no longer balance over the next 10 years, sending the dollar sliding in the process, S&P futures are about 30 handles higher, flirting with 2,650, some 100 points higher from the lows observed around noon on Friday.

S&P 500 futures jumped 1.2%, following a weekly decline that at one point was the largest since the financial crisis. Futures on the Dow Jones Industrial Average added 1.3 percent, while those on the Nasdaq 100 Index were up 1 percent. Meanwhile, the VIX fell 11% extending its drop to a second day after JPM wrote on Friday that the worst of the vol spike “unwind” by CTAs, risk parities, and vol-targeting funds is behind us.

Traders have been on edge following tumultuous moves in equities last week, which saw the S&P 500 post its worst week in two years with a 5.2% decline on fears over interest rate hikes, ending a stretch of 588 days without a 5% drop.

However, what has been most surprising about today’s session is that Ten-year Treasury yields climbed on Monday, touching a fresh four-year high amid growing inflation fears, worries about the surging US deficit, and concerns the Federal Reserve may accelerate its rate-hike schedule even as it continues to shrink its balance sheet. The 10Y yield rose as high as 2.8930%, yet unlike last week this has – so far – not been enough to dent the equity enthusiasm.

The Treasury curve flattened, with futures edging further lower led by belly, EGB peripheral spreads see minor tightening given general risk-on; iTraxx Crossover also tightens ~12bps. Germany’s 10-year yield increased three basis points to 0.77 percent, the highest in more than two years. Britain’s 10-year yield rose five basis points to 1.605 percent, the highest in almost 22 months.

European equities rebounded on Monday from the worst weekly sell-off in two years with share prices firming in opening trading. Europe’s Stoxx 50 index climbed some 1.9%, led by miners as European bourses catch up with the gains seen late on Wall Street on Friday with macro newsflow otherwise light in the region. Sector-wise, material names outperform in fitting with some of the price action seen in the complex during Asia-Pac trade, energy names are also higher as energy prices continue to retrace some of the losses seen on Friday. In terms of stock specifics, Heineken (-4.2%) are seen lower after their earnings report was clouded by currency effects, Akzo Nobel (+1.7%) have been in focus today after reports in the FT suggesting the Co.’s chemicals unit has been subject to PE interest, Barclays (+1%) have been charged by the SFO regarding their Qatari loans and Airbus (-1.2%) are lower amid reports that they have stopped delivering A320neo jets due to issues with Pratt &Whitney engines.

Asia similarly surged, with South Korean equities and the won rose after North Korean leader Kim Jong Un invited his counterpart to meet. Vice President Mike Pence told the Washington Post the U.S. is ready to engage in talks about North Korea’s nuclear program, signaling a shift in policy. The won outperformed major currencies. Japan’s markets are closed for a holiday. Elsewhere, Hang Seng (-0.2%) and Shanghai Comp. (+0.8%) were positive ahead of this week’s Lunar New Year celebrations, while most of the Asia peripheries traded with cautious gains amid a lack of drivers and with various holiday closures scheduled through to next week.

China’s ChiNext index of small-cap and tech shares jumped after the government was said to call on companies and mutual funds to boost the stock market. The ChiNext rose 3.5% in Shenzhen, its biggest gain since July 27, after falling to a three-year low Friday. “The news about government support eased some worries,” said Shen Zhengyang, Shanghai-based strategist with Northeast Securities Co. “People are hunting for bargains, especially smaller companies that fell too much in the recent rout”

Others were more cautious: “Futures can move around quite a bit, but what I will be watching for is a stable ‘green’ in the futures coming into tomorrow,” BB&T’s Walter “Bucky” Hellwig told Bloomberg. “This will show that the S&P didn’t hold on to its 200-day moving average by accident, and this confidence is going to pull more buyers into the market.”

To be sure, with Japan closed for holiday, and virtually no economic events and market drivers so far on Monday (this will change with Wednesday’s CPI release) has led to an extremely muted European session.

Meanwhile, the USD is weaker across the board after Sunday reports that the Trump budget to be released today will not only increase the US deficit but – for the first time under a Republican president – won’t balance over 10 years. 

Other major currencies were rangebound, USD/ZAR drifts lower in anticipation of Zuma departure, RUB rallies with crude. Some other pairs from Bloomberg:

The dollar’s decline supported commodities, with metals higher and crude oil halting a six-day selloff. Both WTI and Brent crude futures have continued to retrace Friday’s losses despite Friday’s Baker Hughes rig count showing a climb of 26 oil rigs. In terms of energy newsflow, UAE energy minister stated the energy market is to balance this year with shale oil output to be absorbed by rising 2018 demand. In metals markets, spot gold is seen higher alongside the softer USD, although gains are likely being capped by this morning’s risk environment. Elsewhere, copper prices have recovered from their two month lows during London trade while Chinese iron ore futures were seen lower overnight after recent rampant gains ahead of the Lunar New Year which kicks off this Thursday.