Australian dollar sags as GDP shocker sinks in

The always bid in Asian time Australian dollar is sagging this afternoon as the unfolding GDP shocker sinks in:

Bond yields are back at the lows but won’t break lower despite not fully pricing what’s ahead:

XJO is up a little but does not look well with those little lower lows:

Dalian is down:

It’s amusing watching Big Iron learn nothing from 2015:

Big Gas is mixed:

Big Gold is BTFD:

The Big Bank bear is back and growling:

Big Realty exists in a Scummo safe zone:

There’s a good chance that the AUD will be more heavily beaten up as London comes in later this afternoon. It often has a much better grasp of macro drivers than Asian markets do.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the fouding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. Are Aussie gold miners still a viable option? I can’t make a call one way or another; too much else going on. Opinions please!

    • I’m quite long and contemplating taking some profits — gold and the miners have got to take a breather soon. It’s all very overbought. But my aim is to buy back in (hopefully) at much lower levels. The gold trade has at least a couple of years to run so, as long as you’re playing in cash, dip your toe in and then average in over time. I admit that playing the Aussie miners is a bit tricky because of the currency in the background, but if you buy a profitable miner then as the gold price rises it’s all gravy.

      Northern Star just made a take-over bid for Echo Resources at a huge premium and their stock rose is response to the news. Normally with a premium that big the acquiring company’s stock would take a backward step. This is just getting going.

      (As an aside: avoid bonds at current levels – the risks are becoming very asymmetrically skewed)

    • My opinion: probably will rise from here but I’m not buying. I don’t like buying at record highs, I don’t know if the upside is very large but the downside could be large.

      But I am already long USD so don’t really need another effectively “short AUD” position, which is what long Aussie gold is. But that’s me. Plenty of people will have a different risk tolerance (and will get richer than me! Or poorer!)

    • I keep thinking about buying in, then either get in and out quickly for some quick coin, or just stay out….seems really overbought for me.

      I find myself wanting to get in and go long, buy usually just end up buying USD instead.

      Bonds are probably overbought, too, but I personally think they have some steam left in them at the longer end, as deflationary forces keep rearing their heads.

      I know others are taking about inflation, but I think that will follow deflation; hence, it will be difficult to get interest rates and bond yields going up.

      My 2c

      • BurbWatcher, I thought you were on the MNRS’s.
        Have you sold them already?
        Maybe it was another member.