Commodities get a second wind
As illustrated in an earlier post, commodities and inflation trades in general are getting relief right in line with recovering indicators like the Copper/Gold ratio. Makes sense for now. As for later, be prepared is all.
Today Thing 1 (commodities) are doing as implied by Thing 2 (30yr Treasury yield). Base metals are bouncing, Energy is ripping again and the Ags have looked constructive to resume bouncing as well. The CRB index tracker DBC has actually been underwhelming lately due to its crude oil weighting.
So all the stuff that was beaten down gets to participate in the Summer Relief Olympics after Tech/Growth first led the charge. But then the yield (lower panel) began to bull as we noted in a real time NFTRH update and we had a macro pivot back to the inflation stuff, still ongoing and intensifying as outliers like Uranium and Lithium get a move on.
Of course most hilariously, the man I consider the worst of the worst of gold promoters it out there touting inflation and how rising oil is going to instigate a massive rise in gold and gold miners. Some things never change dear buggish friends. But just remember he is almost always wrong sometime after his ‘!!!!’ strewn pitch has been inflicted upon the readership of gold websites.
As for the stuff that should be rising under inflationary pressure, keep in mind the possibility that it is a counter-trend move coming during the slack summer ‘relief’ season. I’d let the inflation trades prove out before going whole hog. CRB/DBC have held their major daily trends (SMA 200) so I’ll have an open mind about a more persistent bull as well.
When we get through Labor Day and FOMC we should have a pretty good idea of the inflated vs. deflating macro.
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