Mea culpa! DXY is not enjoying new Trump tariffs, while EUR is. Greenland TACO, anyone?
AUD is a golden safe haven.
Donald Dump has turned China from univestable to investment essential.
Gold, gold, gold for Australia!
AI metals smashed.
Big miners are trying to outrun the iron ore black hole. Good luck with that.
EM stocks ATH.
Junk warning a little but calm in the circumstances.
Bond back-up alert as Japanese contagion spreads. YCC anyone?
Stocks insist!
Trump’s absurd tilt at Greenland is fusing with the Japanese panic to produce a global bond back-up, and we all know what that means.
Duration up = tech down.
Worse, both currencies are falling in a return of the EM external crisis pattern that took off after Liberation Day.
Adding insult to injury, fundies are about as long stocks as is humanly possible.
So we have the conditions for decent correction here.
Look for three possible reversal signals.
First, Donald Dump will chicken out on Greenland if stocks, bonds, and DXY keep moving down in concert. 86% of Americans think the idea is absurd, proving once again that Dump is a special class of American clown.
Second, polls do not approve of his handling of ICE murders, so he has some local crises to work on moving toward midterms. A shift of focus there will be meaningful.
Third, Japan is going to have to do something soon, as the new government of Sanae Takaichi takes a pro-fiscal spending stance to the polls and the long end of the curve collapses. Yield curve control looms.
All of these dynamics apply in reverse to the AUD as it tracks the EUR and gold, unless risk really gets spooked, in which case it’ll crack as well.
