Playing around with some charts this afternoon and amazed at the
correlation with the YEN vs bonds and how they have given an early
warning signal of turning points in the market such as last
December when we had a top in bonds and the YEN.......and then the
stock market bottomed three months later.
Interestingly enough, the YEN has been on a tear since early
April and the US 20 year bond(TLT) didn't not follow until a
couple of months later.....Either way they are both moving in
tandem now and up.
As a comparison the USD and SPX are uniquely correlated as we
all know but they seem to reverse direction after the YEN and bonds
change direction.....The YEN seems to be the most sensitive
indicator(ie. carry trade ongoing or sign of deflation) wrt
everything.
Another interesting observation is the CCI which I plotted
for TLT and the zero line seems significant if broken to the
downside or upside and tends to trend for awhile....Got that from
Matt/Steve......What do you guys think??
For the last 15 years, the lowest cost currency of choice to
short has been the Yen. However, over the last few weeks, the
dollar has become the cheapest as the 3‐month LIBOR has fallen
below the Yen.
Therefore, the fall in the $USD could be because of
short‐selling. The dollar is now within 5% of its record low,
making a leveraged trader more cautious about shorting.
With the dollar being the world’s reserve currency and the basis
of so many commodities, a short‐covering rally could develop in the
dollar as too many players don’t want it to fall too
precipitously.
Conspiracy thought for fun: Does the IMF’s sale of gold suggest
support for the dollar?
What is the YEN telling us right now?
Posted by bullau on 29th of Sep 2009 at 05:37 pm
Playing around with some charts this afternoon and amazed at the correlation with the YEN vs bonds and how they have given an early warning signal of turning points in the market such as last December when we had a top in bonds and the YEN.......and then the stock market bottomed three months later.
Interestingly enough, the YEN has been on a tear since early April and the US 20 year bond(TLT) didn't not follow until a couple of months later.....Either way they are both moving in tandem now and up.
As a comparison the USD and SPX are uniquely correlated as we all know but they seem to reverse direction after the YEN and bonds change direction.....The YEN seems to be the most sensitive indicator(ie. carry trade ongoing or sign of deflation) wrt everything.
Another interesting observation is the CCI which I plotted for TLT and the zero line seems significant if broken to the downside or upside and tends to trend for awhile....Got that from Matt/Steve......What do you guys think??
Interesting Perspective
Posted by whistlebear on 29th of Sep 2009 at 06:39 pm
Can you post your charts.
Thank
Carry Trade Thoughts
Posted by dsomes on 29th of Sep 2009 at 06:01 pm
For the last 15 years, the lowest cost currency of choice to short has been the Yen. However, over the last few weeks, the dollar has become the cheapest as the 3‐month LIBOR has fallen below the Yen.
Therefore, the fall in the $USD could be because of short‐selling. The dollar is now within 5% of its record low, making a leveraged trader more cautious about shorting.
With the dollar being the world’s reserve currency and the basis of so many commodities, a short‐covering rally could develop in the dollar as too many players don’t want it to fall too precipitously.
Conspiracy thought for fun: Does the IMF’s sale of gold suggest support for the dollar?
Why can't I post Charts???? http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=2&mn=8&dy=0&id=p46317047057&a=179511659
Posted by bullau on 29th of Sep 2009 at 05:40 pm
Why can't I post Charts????
http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=2&mn=8&dy=0&id=p46317047057&a=179511659