evening wrap
market vibes
December 16…
“It’s ok to be wrong. It’s unforgivable to stay wrong.” Marty Zweig
Lots of charts tonight. A lot is happening…
A wave of euphoria swept through social media (from certain quarters) as rumors that Trudeau may step down went viral this afternoon. Headlines like “Canada in chaos” and “Unmitigated disaster” followed the resignation of Finance Minister Chrystia Freeland, and the prompt appointment of a new one, Dominic LeBlanc.
As you can see, the Loonie is no longer just a nickname. And although it was expected, the 0.50% cut by the BOC last week was probably a stupid excess in hindsight.
In the realm of “rates gone wild” …the Chinese 10 year yield was ubiquitous on X today. This reminds me of Bunds in 2014… and obviously, this is not a new trend. A bull market in Chinese bonds as half the population of the planet is buying millions upon millions of ounces of gold.
In the US, CBOT 30-year futures are falling with zero change in open interest, indicating price discovery has moved off the public exchanges. Fwiw …The SNB just cut 0.50%, and the BOJ is expected to hike 0.25%. Diversity has migrated to global fixed income…
Although the dollar index (chart below) isn’t moving, these stunning often contrary moves in yields and rates are affecting around 90 trillion dollars of money supply (G7+ China + EM), and they are a literal FX wrecking ball for USD pairs in CHF, JPY, KRW, INR, TRY, BRL, AUD, NZD etcetera (I checked them all on BBG).
This is nothing less than currency self-immolation, especially on CAD and CHF, in my opinion. At any rate, let’s keep going and see what gold, the stock market and other bizarre happenings are unfolding as Tuesday is already trading in Asia.
