The charts that matter: yields soften after US inflation data rises less than expected

The US dollar strengthened this week. Here’s how it affected the charts that matter most to the global economy.

Welcome back. 

On the cover of this week’s issue of MoneyWeek, we’ve looked at how China is cracking down on many sectors of the economy, particularly on tech, which is rattling investors. The regulatory clampdown on online education platforms and tech giants such as Tencent and Alibaba has had an inevitable knock-on impact on the price of the leading UK-listed China funds, says David Stevenson. Is this a buying opportunity or is there more to come?

Meanwhile, our big investment feature this week is on how Reits can help your portfolio fight inflation. Cris Sholto Heaton takes an in-depth look at which sectors and which countries offer the best opportunities. 

If you’re not already a subscriber, sign up for MoneyWeek magazine now.

This week’s “Too Embarrassed To Ask” video explains what "tapering" is. That matters right now because it tends to make markets jittery when it happens and central banks are debating when to do it. Here's what it means.

We don’t have a new podcast for you this week, but I just wanted to alert you once again to last week’s podcast with GMO’s Jeremy Grantham. If you haven’t listened to it yet, please make sure you do – Grantham is one of the smartest minds in markets and in this extended podcast he and Merryn cover everything from bubbles to the state of American capitalism to house prices in the UK. It’s not one to miss. And we’ll be back with a new podcast next week. Listen to everything he has to say here.

Now for the charts of the week. 

The charts that matter 

Gold fell hard at the start of the week, partly due to concerns that strong US employment date would convince the Federal Reserve to end loose monetary policy at a faster pace. However it made up a lot of ground by the end of the week as US inflation and consumer confidence data were both weaker than expected.

gold

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) was on the rise but ebbed towards the end of the week as the economic data mentioned already came in a bit weaker than expected.

dollar

(US dollar index)

The Chinese yuan or (renminbi) rose accordingly (when the red line is rising, the dollar is strengthening while the yuan is weakening).

Yuan

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond rose early in the week amid the debate on whether the Fed will start easing stimulus or not, but dipped towards the end of the week.

US 10 year yield

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond fell a little.

japanese yield

(Ten-year Japanese government bond yield: three months)

And the yield on the ten-year German Bund was little changed.

German yield

(Ten-year Bund yield: three months)

Copper prices eased after supply disruptions at the world's biggest copper mine in Chile showed some signs of abating.

Copper

(Copper: nine months)

The Australian dollar fell.

Australian dollar

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin rose, recovering from a recent slide as pressure mounted on House Speaker Nancy Pelosi to alter the crypto tax provision in the Senate's infrastructure bill.

Bitcoin

(Bitcoin: three months)

US weekly initial jobless claims stood at 375,000, a decrease of 12,000 from the previous week's revised level.

US weekly claims

(US initial jobless claims, four-week moving average: since Jan 2020)

Brent fell a little after fears resurfaced that the Delta variant of Covid-19 may hit demand.

Brent

(Brent crude oil: three months)

Amazon fell a little, continuing some bearish sentiment from disappointing earnings at the end of last month.

amazon

(Amazon: three months)

Tesla's stock rose after Jefferies analysts raised their price targets on expectations that Tesla will become a mass-production electric vehicle leader.

Tesla

(Tesla: three months)

Have a great weekend. 

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