The charts that matter: pre-election paralysis

Markets are caught in the headlights as the US election approaches fast – John Stepek looks at how the charts that matter most to the global economy are reacting.

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And this week I joined The Week Unwrapped team to discuss unions for social media stars, the new space race, and how Germany’s new bankruptcy laws have caused a stir because of their pronoun usage.

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Here are the links for this week’s editions of Money Morning and other web stories you may have missed.

Now for the charts of the week.

The charts that matter

Gold clawed higher this week but it was a struggle. With the US election coming up we keep hearing rumours and counter-rumours that there will or won’t be more government spending before then. However, while agreement seems unlikely now, after the election, regardless of who wins, a splurge is seen as a near-certainty. That’s likely to keep investors interested in gold for the time being.

(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 again little changed this week.

(DXY: three months)

The Chinese yuan (or renminbi) continues to strengthen against the dollar (when the black line below rises, it means the yuan is getting weaker vs the dollar). Investors seem to be parking their fears about China’s lack of transparency in favour of its improving economic recovery.

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

The yield on the ten-year US government bond was a little lower than at this time last week.

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year remains tightly bound to the near-zero mark.

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

The yield on the ten-year German Bund headed lower.

(Ten-year Bund yield: three months)

Copper continued higher, helped by investor appetite for China-related investments.

(Copper: nine months)

The Aussie dollar was little changed.

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

Cryptocurrency bitcoin continued higher this week.

(Bitcoin: three months)

US weekly jobless claims came in at 898,000 this week, well up on the 845,000 seen last week (which was revised higher from 840,000), and well up on economists’ expectations. The four-week moving average ticked higher to 866,250 from a revised 858,250 previously.

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

The oil price (as measured by Brent crude) was little changed on last week. On the stockmarket, the oil sector is now trading at some of its cheapest valuations ever seen.

(Brent crude oil: three months)

Amazon ticked higher this week as the Nasdaq continued to recover from its September slide.

(Amazon: three months)

Electric car manufacturer Tesla also made gains.

(Tesla: three months)

John Stepek

John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.