DXY was soft last night. EUR and CNY stable:
AUD was soft against developed markets:
Weak against emerging markets:
Gold is only hanging on:
Oil was hammered 4% on rising Saudi supply. Brent looks very toppy:
Base metals are in free fall:
Miners were hit:
EM stocks too:
Junk did better:
Treasuries were sold:
Bunds too:
Stocks softened with oil:
The commodity crash marches on despite a weaker DXY. The obvious trigger is fading Chinese growth. As noted yesterday, it’s slowdown remains slow:
That is especially the case for realty which is still printing huge monthly floor area starts. That’s why bulk commodities are holding up better than base metals. It is also why the AUD has so far weathered the storm given the terms of trade have been so far impacted only mildly.
I do not expect this circumstance to persist. China’s shadow banking crackdown will filter through to realty eventually, just as it did in 2015:
When the bulks break, the AUD will be exposed to the full force of the negative yield spread:
David Llewellyn-Smith is chief strategist at the MB Fund which is long US equities that will benefit from a falling Australian dollar. Below is the performance of the MB Fund since inception:
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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.