Authored by Steven Vannelli via Knowledge Leaders Capital blog,
In a US Dollar bull market with interest rates at zero, cash is rightfully dismissed as a non-asset class. But, when the US Dollar is in a bear cycle, things change, irrespective of what US interest rates are.
There are a handful of indicators we use to identify US Dollar bull and bear cycles.
S&P futures are flat, still spooked by the WSJ's report that Gary Cohn will not be the next Fed chair, while both European stocks and Asian shares gain in a overnight session on edge in which everyone is looking forward to today's main risk event: the ECB meeting and Draghi press conference due in under two hours. The dollar continued to weaken against most G-10 peers as tensions over North Korea, concerns over Stan Fischer's resignation and the increasingly cloudy Fed outlook outweighed positive sentiment from the US debt ceiling extension.
S&P futures are sliding this morning, down 0.4% and tracking the accelerating decline in European and Asian stocks, driven by a move higher in global interest rates, which started with Japanese 10Y yields rising to 0.1% for the first time since February, but mostly Bund yields which spiked after tripping stops, and jumped as high as 0.53% for the first time since early 2016. Oil climbs, dollar and gold slide. Economic data include initial jobless claims, trade balance, Markit PMI readings.
Steve Saville wrote a post this week, in which he proposed a model that indicates the fundamentals of gold. According to him, these are: (1) the real interest rate, (2) the yield curve, (3) credit spreads, (4) the relative strength of the banking sector, (5) the US dollar’s exchange rate, (6) commodity prices, and (7) the bond/dollar ratio.
Authored by Kevin Muir via The Macro Tourist blog,
With the rising global political tensions, gold has gotten a bid over the past week. But is that what is driving the price?