Ok its that time of the week again for the award winning Swiss team’s usual run through of the global asset markets.
Really this should be read alongside the comprehensive Sunday technical update. Ive little more to add other than picking up the Swiss team’s comments re the market internal sector issues.
We picked up a few weeks ago the recent divergence between oil producers and the under lying oil futures markets. The issue had to get, at least, partially get resolved. The oil producers have corrected. And recently, in the last couple of session, wti has performed well and so the mean is back into some alignment now. It was a well flagged move this one. They also picked up on the finance sectoral strength. This is a huge support to the market and the sector is looking to add weight into year end, a market positive. The fizz of the cyclical sectors seems to have come off a little in recent sessions but, for the moment, it looks more like a pause for the final assault on year end than much more. Indexes like the ftse20 and ibex are struggling here. No levels are broken just short term recently up trends so no alarm bells as yet but we must remain on the look out for a breakdown in the cyclicals as being an early warning alarm on the state of the market. Its hard to envisage a new YE higher high without the cyclicals really leading things. Semi conductors, Dow transports, Finance etc are the usual key sector indicators. Beyond these the international cyclical indexes of the ftse250 and ibex and also some EM indexes should be watched and traded if you have appetite.
Credit markets remain key to the health of all asset markets hence its correct to see the team picking up on the UST price moves. Across credit the talk of the taper is picking up rates again as inflation falls ie real rates continue to rise so the squeeze is on albeit at low nominal levels for now. Junk and corporate paper rates remain fairly benign for now though the 2.83% level for the UST is important and bulls desire that level to hold for a merry YE.
A credit set of charts here for those interested with some levels marked on.
Here a fixed income review from SC.
Bullion wise its been a depressing year for the gold bugs I must say. Its a fire and forget sort of allocation for me at present. Im happy to have the allocation albeit its nominal number is lower than it started the year at. The GDX miners have been a total disaster in 2013 thus far. If you demand the liquidity you are toast and there is little on the horizon (aside from very near term) to suggest fairer times soon. What we can say is that bullion could be sending us all a large signal that we have no conquered deflation as yet and that another wave could soon be around the corner for asset markets. If this is correct the gold dow ratio could be about to correct via a lower dow nominal number in early 2014. This isn’t ideal for leveraged gold holders but for physical holders its great as physical gold bugs look beyond the nominal fiat issues and prefer issues of real purchasing power.
Without more delay here the report.
All the best
Rich
(12 votes, average: 5.00 out of 5)
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