- Fixed Income: The Ted Spread on the short term side and the High Grade Corporate Spread on the longer durations is showing weakness. As I've been saying for some time, Fixed Income is where we have the wildest excesses and therefore will be the tell. How High Yield will dovetail into this remains to be seen next week
- FX: The US$ got killed as Gold and Oil started to fly. This looks very overbought and a countertrend could be in the cards, maybe even a medium term bottom. Don't forget that the US$ has become the FX Carry (short side of the trade) Currency of choice. If we see some kind of credit unwinding, then the US$ will strengthen and Gold suffer. (Pls bear in mind that the target for gold resulting from the Triangle breakout is around 1055 to 1100 and has been hit. It could go higher here but it could also sport a headfake. The headfake could be part of a much bigger headfake, namely related to the Monster inverse Head & Shoulders everyone is following for the better part of the last couple of month. Gold has to stay above 1000-1020 to keep the Goldbugs euphoric otherwise we will go to 650-700 within the next couple of month before trying the big up-swing again....)
Bottom Line:
try to assess things through the lense of de-leveraging
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