Don’t Just Focus On Oil: Macro Charts You Must Know #24
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Interest rates and oil prices continue to capture the headlines, but are things as rosy as the rallies in both imply?
- USD claws back some of last week’s losses
- At this point only GBP has managed to break out of its downtrend vs the USD
- AUD, CAD, EUR are close to breaking out, but remain in their established trends for now
- Interest rates continue to rally higher
- BUT, the US yield curve still isn’t steepening, and US breakevens continue to tumble
- Don’t mistake oil’s rally as indicative of a global economic boom
- While WTI surged higher and broke through its triple top ~$84, copper and iron ore prices aren’t indicating any kind of broad based global economic expansion, which is also supported by what US breakevens and the yield curve are doing
- On the contrary, if oil prices remain this high and the US yield curve keeps flattening, lower growth and higher input costs will instead become a drag on growth
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