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I'd like to attempt to connect some disjointed thoughts and synthesise them into some sort of view.
We have the immediate situation that the new Chinese has imposed its will on their banking system by giving it a credit-crunch heart attack and choosing the survivors. Perhaps they will stimulate / bail-out and take their turn next in the currency devaluation merry-go-round.
Liquidation / margin calls in all sectors resulted from the acute Chinese crisis (as per 2008) except that the causes are more hidden behind the Chinese curtain.
Meanwhile, in the west, we have bail-in and "tapering" managing down expectations of QE-induced inflation. Better macro data from the US (real or not) and worsening EM picture has caused inflow of hot capital into US stocks, dollar.
China no longer is accumulating treasuries net / trade is more balanced with US. This may or may not be dollar negative depending on your viewpoint. http://ftalphaville.ft.com/2013/06/2...or-taper-fear/)
Most notably of all, the US 10Y treasury IS AT 2.6% and RISING FAST!!
All this has acted (in my opinion) to lower gold and commodity prices. The steepening yield curve presumably will help recapitalise banks.
Very long-term gold vs stocks moving averages have crossed. Gold looks to have topped on a multi-year technical / chart basis (though I can't see why, fundamentally).
Politically, the window dressing is starting, with the departure of LIBOR-fixer Paul Tucker and the arrival of Carney.
Syria may or may not turn out to be a point of confrontation between old enemies.
It seems like we are at another major inflection point.
What next? Is that the generational low for yields? What will happen to governments' funding position with rising yields, in particular US and Japan? Are rising yields bad for the dollar? Whether the rising dollar is sustainable may depend on how substantial / material the US recovery is.
My spidey-sense tells me there has been front-running of (at least) the gold liquidation drop by large western banks shorting ahead of the induced Chinese crisis. This would imply a line of communication (at least one-way) between the Chinese leadership and the money centre banks. If true this would support EJ's hypothesis of a devaluation carousel and not a currency war.
We have the immediate situation that the new Chinese has imposed its will on their banking system by giving it a credit-crunch heart attack and choosing the survivors. Perhaps they will stimulate / bail-out and take their turn next in the currency devaluation merry-go-round.
Liquidation / margin calls in all sectors resulted from the acute Chinese crisis (as per 2008) except that the causes are more hidden behind the Chinese curtain.
Meanwhile, in the west, we have bail-in and "tapering" managing down expectations of QE-induced inflation. Better macro data from the US (real or not) and worsening EM picture has caused inflow of hot capital into US stocks, dollar.
China no longer is accumulating treasuries net / trade is more balanced with US. This may or may not be dollar negative depending on your viewpoint. http://ftalphaville.ft.com/2013/06/2...or-taper-fear/)
Most notably of all, the US 10Y treasury IS AT 2.6% and RISING FAST!!
All this has acted (in my opinion) to lower gold and commodity prices. The steepening yield curve presumably will help recapitalise banks.
Very long-term gold vs stocks moving averages have crossed. Gold looks to have topped on a multi-year technical / chart basis (though I can't see why, fundamentally).
Politically, the window dressing is starting, with the departure of LIBOR-fixer Paul Tucker and the arrival of Carney.
Syria may or may not turn out to be a point of confrontation between old enemies.
It seems like we are at another major inflection point.
What next? Is that the generational low for yields? What will happen to governments' funding position with rising yields, in particular US and Japan? Are rising yields bad for the dollar? Whether the rising dollar is sustainable may depend on how substantial / material the US recovery is.
My spidey-sense tells me there has been front-running of (at least) the gold liquidation drop by large western banks shorting ahead of the induced Chinese crisis. This would imply a line of communication (at least one-way) between the Chinese leadership and the money centre banks. If true this would support EJ's hypothesis of a devaluation carousel and not a currency war.
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