Here is an important look at the US dollar and Treasuries, plus a key to the gold market.
May 20 (King World News) – The following is from Jason Goepfert at SentimenTrader: While stocks have struggled, bonds and the dollar have both been rising. Whether one is helping the other is beside the point – primarily it suggests nervousness on the part of investors. When those two markets have behaved like this over the past 40+ years, stocks have usually enjoyed above-average returns, as did bonds. The dollar did not.
There are an increasing number of signs that investors, or traders at least, are highly concerned about markets…
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The WSJ notes that one of these is the simultaneous rise in bond prices and the dollar. As bond prices rise, yields decline, and they’re nearing their year-low levels, just as the dollar is nearing its highs.
The dollar’s haven appeal tends to kick in during times of extreme market stress, as investors liquidate riskier bets and pile into Treasuries (see chart below).
US Dollar Rallying While Bonds Yields Tumble
The moves have picked up in the past week with a rocky stock market (again, see chart above).
Key To The Gold Market
King World News note: The strong US dollar has continued to put pressure on the gold market. For the time being, so goes the dollar, so goes gold. The important thing to keep in mind is that gold has been remarkably strong vs many of the other major currencies across the globe. At some point gold will break away from the dollar and it will rise vs all currencies. Gold did this during the first leg of the bull market and it will do it again when people least expect it, which may be soon.
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