In reviewing this past week of price changes across global macro, the most interesting callout here is that the US Dollar has been going up at the same time gold has. A strengthening dollar has effectively hammered equity prices everywhere but in China. Meanwhile, last week at least, the early signals of “re-flation” have manifested themselves in both 10 year yields, gold, and oil (oil had a +27% move this week, and 10 yr Treasuries sold off taking 10 yr yields 30 basis points higher week over week to 2.62%).
What does all of this mean? In the face of an improving American credit and liquidity picture (narrowing TED spread, steepening yield curve, etc…), there remains a Crisis of Credibility in Foreign Currencies, large cap US Financial Stocks, and US Treasury Bonds alike.
Keith R. McCullough
CEO / Chief Investment Officer