The EUR bear market rally continued last night:
AUD was up and away:
Not so EMs:
Gold was soft:
Oil’s run is over, created then killed by OPEC:
Base metals were mixed:
Big miners fell:
EM stocks pretended everything is fine:
As EM junk keeps falling:
Treasuries were smashed:
And bunds:
Everyone suddenly wants to own Italian debt:
And stocks jumped with Nasdaq at record highs:
All technical stuff. Under the bonnet things are not improving, via the FT:
Italy’s new anti-establishment government has started its mandate on a collision course with Europe as top ministers from the League and the Five Star Movement threatened to ratchet up deportation of migrants and rip up pension reforms.
Matteo Salvini, Italy’s newly appointed interior minister and head of the anti-immigrant League, took to Twitter on Monday to denounce Europe’s migration policy. “Either Europe gives us a hand to make our country secure or we will choose other roads,” Mr Salvini said.
Mr Salvini also pledged at the weekend to increase deportations of undocumented migrants, up from about 7,000 last year, and to create mass camps where people could be held for up to 18 months.
Luigi Di Maio, Five Star’s leader and the new minister for economic development, also took aim at Europe in his first major public appearance since the formation of the government. He said on Sunday the new government intended to “do many things”, including ripping up a pension reform pushed through by the technocratic government of Mario Monti.
“The money to do this we will take from Europe. They will take it from us there because we have the men to be treated equally by other European countries,” he said.
The weapon of choice for Europe’s push back will be Italian yields, via Reuters:
The European Central Bank slowed its purchases of Italian government bonds last month, just as investors were offloading them on fears of a eurosceptic government taking power in Rome, ECB data showed on Monday.
The ECB bought 3.6 billion euros ($4.22 billion) worth of Italian government bonds and 4.2 billion euros of French debt as part of its stimulus programme in May, in each case roughly 8 percent less than its rules dictate, according to Reuters calculations on ECB data.
The ECB explained the reduced purchases by saying it needed to buy up more paper from Germany, where a large amount of debt had expired in April.
The bank was seeking to counter speculation in Italy that it had deliberately bought less of that country’s debt to influence the formation of a new government in Rome, where the president vetoed the appointment of a eurosceptic finance minister amid a market storm.
How coincidental! But be careful what you wish for. Polls continue to swing strongly towards the EUR-skeptics, especially fascists:
Italy needs out of the EUR so it can resume deflating externally:
Because deflating internally is radicalising politics.
No change for me. EUR to resume falling. DXY to resume rising. China to slow and commodities fade through H2. AUD to keep falling once we’re past this little GDP-inspired rally.
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David Llewellyn-Smith is the chief strategist at the MB Fund which offers two options to benefit from a falling AUD so he is definitely talking his book. The first option is to use the MB Fund International Stocks Portfolio which is always 100% long as a part of your own asset allocation mix. The second option is to use an MB Fund tactical allocation in which we choose the asset mix for you, including exclusively international stocks, but with bonds and other assets as well to ensure a more conservative mix.
The recent performance of both is below:
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance.
