So far this correction appears to be one of the most well flagged corrections in living memory. Having said this is has been well flagged for some time so for early shorters that got ahead of price earlier in the year its been a very tough year. The old adage that “we are paid on price” and not on technical indicators is a truism that can drain even the most confident professional.
Anyway, we have some risk weakness along side US$ strength so it appears the old correlations are back in play for the moment. One instrument has not played to her old correlations or the jaw boning from the Fed and is the fixed income sovereign bond market.
Price rose, yields fell, even as risk prices rose and the “recovery” took hold. As the global recovery has stalled but the US recovery sustains bond prices are rising again and yields compressing downward. Its a fascinating dynamic this and is surely part of money velocity falling along side the long forecast capex increases not materializing as yet. In this brave new world the extra central bank provided liquidity appears not to be translating into either investment or wage growth. It will be an interesting challenge for the Fed to move to a rising yield curve given capex trends or is the Fed in control of this and bond investors have totally mispriced forward yields here?
This is a technical update so lets move quickly back to this practice.
Here the Swiss team’s latest:
And here AG
And here Cs
And here a good commodity run through:
And here JP on Credit (or debt on the other side!)
And here CS with a useful dividend stock update..
And here JP with some fx comments:
The US$ is a very crowded trade now but the problem here is where else do you go? Its not an easy allocation out of the US$ for the moment.
Here CS on the emerging markets:
All the best
Rich