The charts that matter: “growth scare” grips the markets

Asset prices fell hard this week as investors reassessed the “reflation trade”. Here’s what’s happened to the charts that matter most to the global economy.

Welcome back. 

In this week’s magazine, we return to an old favourite: gold. There’s no denying it, it’s had a bad year – down around 15% in the last 12 months even as commodities rallied hard. But does that mean there’s no point holding gold? Far from it, says Dominic Frisby. The backdrop “remains auspicious” for gold, and we could see the price rise by 30%-40%. And of course, in times like these, it’s invaluable as portfolio insurance alone. Find out what he has to say in this week’s magazine – if you’re not already a subscriber, sign up for MoneyWeek magazine now.

This week’s “Too Embarrassed To Ask” video has a gold theme, too. Fifty years ago this month, President Richard Nixon arguably pulled the world off the last vestiges of the “gold standard”. But just what is the gold standard? Find out here

The podcast is back! This week, Merryn’s talking to Edward Bonham Carter of Jupiter Asset Management, and they cover a great deal of ground. Find out what Edward says here.

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

Now for the charts of the week. 

The charts that matter 

Gold’s recovery stalled again after an encouraging couple of weeks.

Gold price chart

Gold price chart

(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) continued its relentless rise.

US dollar index chart

US dollar index chart

(DXY: three months)

The Chinese yuan (or renminbi) reflected the dollar’s strength (when the red line is rising, the dollar is strengthening while the yuan is weakening). 

USD/CNY currency chart

USD/CNY currency chart

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

The yield on the ten-year US government bond fell further.

US Treasury bond yield chart

US Treasury bond yield chart

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond continues trading in its usual (much tighter than it might look – look at the scale) range.

Japanese government bond yield chart

Japanese government bond yield chart

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

And the yield on the ten-year German Bund slipped further back.

German Bund yield chart

German Bund yield chart

(Ten-year Bund yield: three months)

Copper took a turn for the worse. 

Copper price chart

Copper price chart

(Copper: nine months)

The closely-related Aussie dollar fell hard, too, not helped by much of the country going into a new lockdown.

AUD/USD currency chart

AUD/USD currency chart

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

Bitcoin continued its wobbly recovery, heading towards $50,000.

Bitcoin price chart

Bitcoin price chart

(Bitcoin: three months)

US weekly initial jobless claims fell by 29,000 to 348,000. The four-week moving average fell by 19,000 to 377,750. 

US weekly jobless claim schart

US weekly jobless claim schart

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

The oil price saw a big drop, falling back to levels last seen in late May. 

Brent crude oil price chart

Brent crude oil price chart

(Brent crude oil: three months)

Amazon continued to fall.

Amazon share price chart

Amazon share price chart

(Amazon: three months)

And Tesla remained volatile, but down on the week.

Tesla share price chart

Tesla share price chart

(Tesla: three months)

Have a great weekend. 

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