This morning copper has broken through 3.50 to trade slightly below the cyclical support which has been in place since the economic recovery began in 2009. A barometer of global demand, this breach if it holds, has traditionally been a leading indicator for the risk market cycle. This time different?
Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
Bonds and the US dollar seem to be agreeing with copper’s pessimistic assessment of near-term prospects for global growth. Both are continuing to attract international inflows as a relative safe haven in a world of increasingly wildcard risks. The much fabled “great rotation” out of US bond markets is so far non-existent.
Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
Meanwhile the strengthening US dollar is an increasing dead weight on the translated earnings of US multi-national firms. See: US firms brace for a Wallop, Weak Yen and Euro threaten to take a major toll on Exporters’ sales this quarter.
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