Last night the Aussie battler ripped higher against the USD, breaking out, and firmed against EUR:
It was strong as well against EMs:
Given the weak USD, it was strange to see gold soft:
Brent shorts are now puking:
Base metals too:
Big miners to the moon:
EM stocks still stuck:
And high yield:
The US curve steepened for once:
European spreads tightened:
And stocks rebounded:
Good luck reading that little lot. It appears markets are happy to take central banks at their word today and embrace the hope of higher growth to drive further monetary tightening hence risk on. However, there are plenty of signals that the issue is in doubt.
One of those is surely the weak USD which, if everyone actually believed the Fed’s rhetoric, would be strong.
For now, at least, our little commodities pain trade is up and running as the USD falls and markets inhale on the Li Keiqang joint. I don’t expect it to get very far given he actually recommitted to reform, as things are China will still slow in H2, and just about every commodity remains glutted including oil, iron ore and copper.
For much of the year I feared we’d miss the boat with the great AUD fall coming before the MB Fund, which remains 70% allocated international and launches next Monday. But markets are nothing if not generous with their imbalances.
We have begun onboarding folks already so get with the program today.
