Gold is ripping, copper’s crumbling, and oil’s caught in a geopolitical crossfire — with policy chaos from D.C. to Tehran shaping every tick. The manufacturing hangover is just beginning, and the market’s favorite safe haven is now a political statement.
Retail sales have once again alleviated immediate recession fears, but signs of cracks are appearing in sectors that typically lag the business cycle, including construction. Consumers remain concerned about the economic situation. Bonds are holding steady for now.
The Fed looks likely to commence a cutting cycle in September, but can we use the typical cutting cycle playbook in EM- fixed income and Commodities? China is (potentially) wreaking havoc with the playbook!
We are starting to see some compelling risk/rewards in betting on higher interest rates again, not least in Europe. We will get news from the US Service sector today setting the scene for the nationwide PMIs later this month.
The Chinese retail buying of gold continues, but Western funds now also see a compelling real-rates case to join the party. The big question is whether the USD will weaken sufficiently to reduce the Asian demand for precious metals.
The PPI serves as a friendly reminder of the cyclical dynamics brewing beneath the surface of the global economy, which contrasts with the current sentiment. We are not convinced of a major slowdown, but we obviously find insurance cuts more likely than a few weeks ago. Here is how to play it..
Markets await further action from the Asian monetary authorities with both JPY and CNY in the intervention zone again. In contrast to earlier rounds of intervention, we are much less certain that precious metals will thrive.
Asian FX weakness is back, and the USD/Gold correlation has turned positive. This begs the question: How does it rhyme with the continued surge higher in gold, and has something fundamentally changed?
The PPI inflation report looks soft on the surface, but is relatively hot when you look beneath the hood. The release valve of this latent inflation build-up is found in precious metals space.
Judging from the most recent data evidence, it remains hard to see the cracks in the US economy even if they continue to appear in various forward-looking indicators. The oil demand was for example all-time-high in week 48.
Equity markets are as bullish as they were in 2021, while fixed-income markets continue to price Fed cuts in for Q2-2024. Are there reasons to worry about current market positioning? Find out here.
This past week has been historical for all the wrong reasons. But could the horror taking place in the Middle East be the last nail in the Coffin for US economic overperformance?
Gold has enjoyed a revival on the back of inflation and monetary expansion. But what happens when the tailwinds disappear?
The RBNZ did a major hawkish move by lifting the policy rate by 50bps. G10 rates still look peakish across the board despite the recent repricing of oil.
The Chinese reopening has possibly been the most covered topic since its announcement in late 2022 – at least in financial circles. The awaited lifebuoy for the global economy, which the reopening consensually was thought to be, has yet to truly show up in prices of commodities essential in manufacturing. We prefer to stay long Industrial Metals (mainly Copper) relative to Energy.
