The Mining GFC has suddenly tipped over into a new rush to commodities with bullish signals everywhere. The US dollar was weaker on the night despite a good jobs report from ADP:
Commodity currencies rocked the kasbah with even the Brazilian real threatening to rally:
Oil is unstoppable:
Base metals flew with copper confirming its inverted head shoulders bottom (iron ore broke out of course too)
Miners flew too:
Only high yield US debt spoiled the part after yesterday’s screech higher, EM kept giving, though:
The flood into high yield is something to behold including the largest day ever for retail flows:
So, what’s going on? The Mining GFC drivers of a weak China and yuan and strong US and dollar are under challenge as China stimulates and the US suffers from the shale bust. There seem to be some jitters around the next ECB easing as well. And the OPEC non-deal has oil firming. A weak jobs report in the US tonight and we will see all of these above trends entrench. Conversely a strong report will see a reversal.
My assessment is that the fundamentals are largely unchanged. The US is still plodding through the shale bust with solid growth in its key housing and automotive sectors. The China stimulus, such as it is, is more glide slope management, and offers one or two quarters of better growth only, with pressure on the yuan to continue.
It’s a sizable hiatus for the underlying drivers, a tradable rally as it were, not a break in trend.
