Don’t say you weren’t warned this time, Glenn Stevens. The Mining GFC exploded Friday night. The US dollar fell:
But Brent still crashed into the $28s for a while:
Base metals were hit and copper plumbed new post-GFC lows:
Big miners were crucified:
Commodity currencies were destroyed:
And US high yield debt was flogged to new post-GFC lows, taking out the European crisis bottom. Emerging market high yield is also in free fall:
The building conflagration of course took the S&P500 to new post-European crisis bounce lows as well. But more importantly the mounting carnage was too much for the delusional Australian bond market which finally gave up on its rate hike fantasy and began pricing the next cut in earnest as 2-year yields plunged -3% to 1.9%:
That was accompanied by a total hammering for the Australian dollar, down -1.6% to a new post-GFC low of $68.27 before rebounding a little:
And there is more to come. As noted recently, the Commitment of Traders report shows markets only modestly short AUD and that remains the case after last week with shorts adding -13k but still miles short of previous lows:
At -23k, large speculators have plenty of room to add to this downside break. Previous oversold periods were at -70-80k.
In conclusion, the Mining GFC just intensified markedly, Australian market’s little bubble of calm just popped and big downside risk just opened up across global markets.