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The ferrous complex is blowing off as hot money chases anything on two legs:
When we see overnight gains in paper markets like this it is a dead giveaway that global hot money is chasing Chinese easing.
One can take this as a signal if we assume that China is on the verge of flood stimulus once more. But after a lousy 10bps of easing as the property sector falls apart, I can’t get excited by that. To me, authorities still look composed and things will need to get a lot worse to trigger substantial easing.
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About the author
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 founding 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.