Today’s charts

China crackdown and rising $US hit commodities

The prices of commodities were falling sharply on Thursday, cutting into months of gains and weighing on equity markets, as China takes steps to cool off rising prices and the U.S. dollar strengthens.

The decline in commodities was widespread, with futures prices for palladium and platinum falling more than 11% and 7%, respectively, along with declines of nearly 6% for corn futures and 4.8% for contracts tied to copper. Oil prices were also down more than 1%.  Thursday’s move continued a slide that began earlier in the week, thanks in part to actions by Chinese regulators.

Palladium prices drop 11.44% Thursday

With the Fed suggesting tapering of rates may occur sooner than expected, we see the bond yield curve tightening, as shorter term yields (purple line on chart) are rising faster than longer-term yields (black line).

Gold prices were clobbered, down ~87.00 today on top of the 45.00 drop yesterday, on concerns the US Fed will increase rates sooner than expected. So much for gold being a hedge against inflation. Note at bottom of the chart, based on Relative Strength Index (RSI) gold is close to being technically oversold.

Silver hit even harder than gold, down 1.96 or 7.03%

The ever volatile Bitcoin acting more like the hedge against inflation.

Potential rising rates means capital flows into the US dollar.

A strong $US means most other currencies weaken, certainly true for the $CAD which has been the strongest of all major currencies.

Full update on all sectors in Sunday’s issue of  the Trend Letter. 

Stay tuned!

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