The charts that matter: bond yields soar

Government bond yields around the world spiked higher this week. Here’s how it has affected the charts that matter most to the global economy.

Welcome back. 

On this week’s magazine cover we take a look at the legacy of Angela Merkel, Germany’s leader who is stepping down after 16 years. Her approval rating of 64% attests to her “steadying influence in an age of turbulence”, says Simon Wilson. But do her achievements live up to her ratings?

Our big investment feature this week is Stephen Connolly writing about cybersecurity. It’s fair to say that cybercriminals have never had it so good. The pandemic has pushed more of our lives online, and the internet has “never been a better hunting ground for data, money and weak access points in corporate networks”, he says. 

So there are plenty of opportunities for investors in combatting them, and Stephen picks some of the best bets to buy now. If you’re not already a subscriber to MoneyWeek magazine,  sign up here and get your first six issues free

This week’s “Too Embarrassed To Ask” video explains what “moral hazard” is. The term comes from the insurance industry in the 18th century. But what does it mean today – and why is it still so relevant? Find out exactly what it means here

And in this week’s podcast, Merryn talks to Gary Channon of Phoenix Asset Management about his investment style and the balance between diversification and performance. Plus, capital allocation and the firms that get it right – and the firms that don't. It’s a fascinating listen – hear what they have to say here.

Oh and John popped up on The Week Unwrapped podcast this week talking about gene editing, comedy copyright and “manifesting” – if you’re curious, have a listen 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 fell further as concerns over tighter money continued, but it managed to rally towards the end of the week.

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) shot up, perhaps in a reaction to the US Federal Reserve taking on a more hawkish tone on monetary stimulus, which also helped to push bond yields higher.

US dollar index chart

US dollar index chart

(DXY: three months)

The Chinese yuan (or renminbi) continued to tread water (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 burst higher as the spectre of inflation (and higher interest rates) raises its head again

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 saw a similar jump, tailing off towards the end of the week.

Japanese government bond yield chart

Japanese government bond yield chart

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

And even the yield on the ten-year German Bund joined in, though it’s still in negative territory, if only just.

German Bund yield chart

German Bund yield chart

(Ten-year Bund yield: three months)

Copper dropped. 

Copper price chart

Copper price chart

(Copper: nine months)

The closely-related Aussie dollar slid against the US dollar.

AUD/USD currency chart

AUD/USD currency chart

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

Bitcoin defied China’s total ban on cryptocurrency transactions to register a near-7% rise on the week.

Bitcoin price chart

Bitcoin price chart

(Bitcoin: three months)

US weekly initial jobless claims rose by 11,000 to 362,000. The four-week moving average rose by 4,250 to 340,000. 

US initial weekly jobless claims

US initial weekly jobless claims

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

The oil price briefly hit over $80 a barrel – its highest in three years – as energy prices continued to dominate the headlines.

Brent crude oil price chart

Brent crude oil price chart

(Brent crude oil: three months)

Amazon saw its share price slide as wider markets fell.

Amazon share price chart

Amazon share price chart

(Amazon: three months)

Tesla, however, had another remarkably good week.

Tesla share price chart

Tesla share price chart

(Tesla: three months)

Have a great weekend. 

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